For most of the day, I’ve been listening to Democratic senators rake Rep. Tom Price, R-Ga., over the coals about a small stock purchase he made last year, conveniently timed with legislation affecting the company whose stock he had bought. Price maintains that his broker made the purchase without his knowledge as part of a routine balancing of his portfolio.
That may well be true, and the whole story probably amounts to nothing (he made a few hundred dollars in the transaction). But it raises a point we addressed in a 2011 editorial. Congress continues to have standards that are just too low when it comes to members’ investments, despite the passage of the STOCK Act the year after we published it.
The best way to avoid the appearance of impropriety is to create rules that don’t just forbid members of Congress from benefiting from their legislative activity, but rather that steer them far away from even the slightest such appearance.
We noted at the time that many personalities in financial journalism are required by their employers to refrain from certain kinds of investment activities altogether. We cited the example of CNBC financial commentator Jim Cramer, who had to give up personally owning individual stocks altogether (he did continue to trade them on behalf of his charitable trust). If such demands can be made on Cramer, why can’t the public make them on members of Congress?
There is no reason members of the House or Senate need to engage in day-trading. They receive excellent benefits and the second-highest salary of any legislators in the world. Instead of passing a toothless CYA measure like the “insider trading” bill now under consideration, members of Congress should adopt something like the rules that govern Cramer’s personal investing….
Membership in Congress is a choice. It carries obligations private citizens do not share. Members must divulge private financial information and follow ethics rules that proscribe some activities, which are otherwise perfectly legal. They should content themselves with simple investments in mutual funds, blind trusts or some other area where their savings can grow without the potential for an instant jackpot. If they cannot, then perhaps they should look for another line of work.
I continue to think we were right about this. Such a rule certainly would have helped Tom Price today, just by preventing him, his broker, or anyone else from creating any appearance of impropriety.
