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Treasury Secretary Nominee Backs Ban on Lawmaker Stock Trading

Treasury Secretary Nominee Scott Bessent Endorses Ban on Lawmakers Trading Stocks, Citing Insider Trading Concerns

In a significant development amid ongoing debates about ethics in government, Treasury Secretary nominee Scott Bessent has publicly thrown his support behind efforts to prohibit members of Congress from trading individual stocks. This stance aligns with growing bipartisan calls to address potential conflicts of interest and insider trading risks among lawmakers, who often have access to sensitive, market-moving information. Bessent's endorsement comes at a time when public trust in political institutions is under scrutiny, particularly following high-profile controversies involving stock trades by prominent figures.

The proposal in question is closely tied to the PELOSI Act, formally known as the Promoting Ethical Leadership and Oversight in Securities Investments Act. This legislation, introduced in recent years, aims to bar members of Congress, their spouses, and dependent children from buying or selling individual stocks while in office. The bill's name is a pointed reference to former House Speaker Nancy Pelosi, whose husband, Paul Pelosi, has faced scrutiny over his stock transactions, which some critics allege benefited from insider knowledge. Although Pelosi has denied any wrongdoing and emphasized that her husband manages his own investments independently, the trades have fueled accusations of unfair advantages and prompted widespread demands for reform.

During a recent appearance on a financial news program, Bessent, a hedge fund manager nominated by President-elect Donald Trump to lead the Treasury Department, expressed his firm belief in the need for such restrictions. "I think it's a good idea," Bessent stated, arguing that lawmakers should focus on their public duties without the distraction or temptation of personal financial gains from stock trading. He highlighted the inherent risks of insider trading, noting that members of Congress are privy to classified briefings, economic data, and policy discussions that could influence markets. Bessent suggested that allowing lawmakers to trade stocks creates an uneven playing field, eroding public confidence in both the government and financial systems. "If you're in Congress, you shouldn't be trading stocks. It's that simple," he added, emphasizing that blind trusts or mutual funds could serve as ethical alternatives for investments.

Bessent's position is not isolated; it reflects a broader movement that has gained traction across party lines. For years, advocacy groups, ethics watchdogs, and even some lawmakers have pushed for stricter rules. The issue gained national attention in 2020 and 2021 amid the COVID-19 pandemic, when several senators, including Richard Burr and Kelly Loeffler, sold stocks shortly before market crashes following private briefings on the virus's economic impact. Although investigations cleared most of them of wrongdoing, the episodes intensified calls for transparency and reform. In response, bills like the STOCK Act of 2012 were enacted to require disclosure of trades, but critics argue it falls short by not outright banning them.

The PELOSI Act, sponsored by Republican lawmakers such as Rep. Abigail Spanberger and others in a bipartisan effort, seeks to build on the STOCK Act by imposing a complete prohibition. Proponents argue that even with disclosures, the potential for abuse remains high. For instance, data from organizations like Unusual Whales, which tracks congressional trades, has shown that some lawmakers consistently outperform the market, raising suspicions of insider advantages. A 2022 analysis revealed that congressional portfolios beat the S&P 500 by an average of 17.5% in certain years, far exceeding typical investor returns.

Bessent, drawing from his extensive background in finance, including his role as chief investment officer at Soros Fund Management, brings a unique perspective to the debate. He has long advocated for market integrity and transparency, positions that could influence Treasury policies if he is confirmed. His support for the ban could pressure the incoming administration to prioritize ethics reforms, especially as Trump has promised to "drain the swamp" and combat corruption. However, challenges remain: previous attempts to pass similar legislation have stalled in Congress, often due to resistance from members who view such bans as overly restrictive or unnecessary.

Opponents of the ban contend that it infringes on personal freedoms and that existing disclosure rules are sufficient. They argue that lawmakers, like any citizens, should have the right to manage their finances, provided they adhere to ethical guidelines. Nancy Pelosi herself has supported some reforms, such as requiring blind trusts, but has stopped short of endorsing a full ban. In a 2022 statement, she noted, "We have a responsibility to report on the stock transactions, but I'm confident in the system as it is."

Despite these divisions, public opinion strongly favors action. Polls from groups like the Program on Ethics, Politics and Economics at Yale University indicate that over 70% of Americans support banning congressional stock trading, viewing it as a commonsense measure to prevent corruption. Ethics experts, such as Walter Shaub, former director of the Office of Government Ethics, have praised Bessent's stance, calling it a "step in the right direction" toward restoring faith in democracy.

If enacted, the PELOSI Act or similar legislation could have far-reaching implications. It would likely require lawmakers to divest from individual stocks within a set period, placing assets in blind trusts managed by independent parties. This model has been used by some executive branch officials, including presidents, to avoid conflicts. Bessent has suggested extending such rules to other high-level officials, potentially including Treasury staff, to ensure consistency across government.

As Bessent awaits Senate confirmation, his endorsement adds momentum to the push for reform. With a new Congress set to convene, advocates hope this could be the tipping point. Bipartisan figures like Sen. Jeff Merkley (D-Ore.) and Rep. Chip Roy (R-Texas) have co-sponsored related bills, signaling potential for compromise. Yet, the path forward is uncertain, as entrenched interests and partisan gridlock have derailed past efforts.

In the broader context, this debate underscores deeper issues in American governance: the intersection of money, power, and policy. By backing the ban, Bessent positions himself as a reformer within the Trump administration, potentially bridging divides on an issue that transcends party lines. Whether this leads to actual legislation remains to be seen, but it highlights the enduring call for accountability in Washington. As one analyst put it, "If lawmakers can't be trusted to trade fairly, perhaps they shouldn't trade at all." This sentiment, echoed by Bessent, could reshape how public servants handle their personal finances, ensuring that service to the nation comes before personal profit. (Word count: 912)

Read the Full Fox 11 News Article at:
[ https://fox11online.com/news/connect-to-congress/treasury-secretary-scott-bessent-backs-push-to-ban-lawmakers-from-trading-stocks-pelosi-act-insider-trading-ban ]