Personal Profit in Congress – The New York Times
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In an academic paper published a few years ago, an economist by the name of Serkan Karadas highlighted a suspicious pattern: Members of Congress earned above-average returns on their equity investments.
The results suggest that at least some members of Congress were profiting from their jobs. With insider knowledge of upcoming policy changes or economic developments, members could buy stocks shortly before their price rise or sell them shortly before they fall.
There have been several high-profile examples in recent years that seem to fit this pattern. In each case, the members say they did nothing improper:
Tom Price, a former Georgia congressman (and later Donald Trump’s Health and Human Services Secretary), has repeatedly traded health care stocks, including a discounted purchase via a special offer from an Australian pharmaceutical company.
Rep. John Yarmuth, a Democrat from Kentucky, bought several cannabis stocks while promoting pro-industry bills, as Judd Legum of Popular Information reported.
Several senators – including Dianne Feinstein, a Democrat; and Kelly Loeffler and Richard Burr, both Republicans – sold shares after receiving a private Covid-19 briefing weeks after the first case was discovered in China.
Likewise, Sen. David Perdue, a Georgia Republican who was an active trader when he was in the Senate, bought shares in companies that stand to benefit from the pandemic, such as Pfizer and Netflix.
The wife of Senator Rand Paul, a Republican from Kentucky, bought shares of Gilead Sciences, which makes a Covid antiviral drug, in the early weeks of the pandemic.
In total, members of Congress and their immediate families bought more than $260 million in assets and sold more than $360 million last year, my colleagues at DealBook reported. Karadas’ research found that many of the outsized stock market gains of recent years have gone to high-ranking Republicans.
“A huge conflict”
A bipartisan group of members of Congress is now trying to put a stop to these trades. They proposed bills that would require members of Congress to place their assets in a blind trust, managed by someone else. A separate bill would prohibit members and top congressional aides from buying and selling individual stocks.
Sponsors of the bills include Senators Jon Ossoff, Mark Kelly, Jeff Merkley and Representative Abigail Spanberger, all Democrats, and Senator Josh Hawley and Representative Chip Roy, both Republicans.
“It’s a huge conflict of interest for someone to trade, for example, pharmaceutical stocks at the same time that they’re making policy for pharmaceutical companies,” Merkley, who represents Oregon, told NPR. .
Spanberger told The Washington Post that she and Roy, who are jointly sponsoring a bill, were both “disgusted” with the current situation. “If putting limits on how we can buy and sell stocks makes someone trust us a little bit more – Congress doesn’t have a good approval rating – I think that’s a quote-unquote sacrifice we should be making,” said Spanberger, who represents a swing neighborhood in Virginia.
For now, the bills seem unlikely to become law, in part because they lack support from Democratic leaders. Nancy Pelosi, the Speaker of the House, argued that members of Congress deserve the same freedom as other Americans to buy and sell stocks. “We are a free market economy,” Pelosi said last month. Members of Congress “should be able to participate in this.”
Critics respond that members of Congress are different from everyone else, due to their access to sensitive information. Critics also argue that those who enjoy the privilege of serving in Congress have a responsibility to place the public trust above their own financial interests; if they prefer not to, they can join the private sector.
Michelle Cottle, editor of Times Opinion, wrote that Pelosi’s position seemed “a little out of touch” given the economic frustrations of many Americans. Helaine Olen of the Washington Post wrote, “Neither bill requires major financial sacrifices. But that’s still too much to ask for some.
Congress tightened the rules on itself in 2012, through a law known as the Stock Act. It prohibits members from trading on the basis of inside information and requires them to disclose all transactions within 45 days. But the law failed to prevent problematic transactions, as predicted by its early detractors, like Senator Elizabeth Warren.
Why? Proving that a specific trade stemmed from a specific piece of information is so difficult that prosecutors have never brought charges based on the law. And dozens of members and their aides ignored the disclosure requirement, according to the Insider publication. The standard first-time fine for failing to report a transaction on time is only $200.
All of this suggests that members of Congress will continue to profit from their access to sensitive information, unless they finally pass a new trade-restricting bill.
Related: Three top Federal Reserve officials resigned last year after being criticized for their jobs. “The conduct is beyond reprehensible,” Dennis Kelleher, president of Better Markets, a watchdog group, told me. The Fed has since tightened its rules.
THE LAST NEWS
Gastronomy in the suburbs
The suburban food scene is often associated with homogeneous chain restaurants. But as tastes and demographics change, chefs are finding a home for ambitious cuisine outside of cities, writes Priya Krishna in The Times.
Opening a restaurant in the suburbs often means cheaper rent and less competition. And the pandemic has created new incentives: A restaurateur from St. Charles, Illinois, noted that while many Chicago businesses were still hurting financially, those around her were recovering faster. It has ample space for outdoor dining, and people move into the area, not out of it.
Some restaurants focus on regional flavors, while others offer innovative takes on heritage dishes, “catering to the tastes of a suburban population that, in part due to the pandemic, is not only increasing but also diversifying” , writes Krishna.
When Edo and Loryn Nalic opened Balkan Treat Box in Webster Groves, Missouri, they wondered if they should water down their flavors. But they found that customers liked to try something new. “They don’t mind not being able to pronounce” certain dishes, said Loryn Nalic. “They want to learn how.”
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Friday’s Spelling Bee pangram was upheaval. Here’s today’s puzzle — or you can play online.
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If you want to play more, find all our games here.
Thank you for spending part of your morning with The Times. See you tomorrow. – David
PS Astead Herndon, national political reporter for The Times, discussed voters who believe the ‘big lie’ on WNYC’s ‘On the Media’.
Correction: Friday’s bulletin misspelled the US Secretary of State’s first name. He’s Antony Blinken, not Anthony.
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Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti, Ashley Wu and Sanam Yar contributed to The Morning. You can join the team at email@example.com.
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Personal Profit in Congress – The New York Times
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