Multiple members of the US Congress have sold banking stocks before and during the market turmoil last month, sparking discussions around conflicts of interest. Analysis of public disclosures of stock sales by Quiver Quantitative shows that at least nine members, including a member of the House Financial Services Committee, sold banking stocks. Members of public advocacy groups have since questioned whether allowing government officials to own or trade stocks might present a conflict of interest with their official duties. However, representatives for the members in question have pointed to financial advisers and the legal requirement to disclose financial decisions.
Josh Gottheimer, a New Jersey Democrat and a member of the financial services committee, was one of the most active stock traders in the House of Representatives, with over 380 trades last year. Gottheimer sold shares in Silicon Valley Bank on March 9, valued between $1,000 and $15,000, just before the bank collapsed, sending US banking stocks into a downward spiral. He also sold other stocks in Charles Schwab and Seacoast Banking, which have since decreased in value by nearly 30% and 10% respectively.
Other members to have sold banking stocks during the crisis include Daniel Goldman, a House Democrat from New York, Jared Moskowitz, a Florida Democrat, John Curtis, a Utah Republican, and Earl Blumenauer, an Oregon Democrat. Despite the controversies, legislation to place limitations on congressional owning or trading in individual securities has stalled in recent years, but support is growing for an outright ban on the practice. Democratic US Senator from Ohio, Sherrod Brown, has introduced a bill to restrict owning stocks, commodities, and futures by members of Congress.
The fact that elected officials own individual company shares has been criticised by advocacy groups as a conflict of interest that erodes public confidence. Danielle Caputo, legal counsel for ethics at the Campaign Legal Center, a campaign watchdog group, said: “Whether or not you are specifically directing a specific trade under the current laws, it doesn’t matter. You are ultimately responsible for those trades, and that is why it is essential to prohibit members of Congress from benefiting from trading single stocks.” Current rules allow members of Congress to wait up to 45 days to report their trades, so further transactions may yet emerge.
