The latest campaign ad by Senator Kelly Loeffler, a freshman Republican from Georgia fighting to keep her job, is entitled “CLEARED.” It recounts how she fought back against charges that she improperly traded stocks based on a confidential briefing she received in January about the looming coronavirus crisis. In late May, the Justice Department confirmed that an investigation into the trades did not find evidence that she broke the law.
But if she was exonerated, Ms. Loeffler paid a heavy political price, as her choice of campaign message vividly illustrates. She burned almost three months of her campaign — time she had planned to use introducing herself to voters — fighting accusations that she traded on insider information to help avert thousands of dollars in losses to her portfolio. Even now, she is struggling to regain the trust of voters.
The story of Ms. Loeffler and a handful of other senators whose trades drew federal scrutiny has become a cautionary tale in Congress this spring, as lawmakers are battling to maintain the public’s trust as they try to respond to a pair of national crises, one a lethal pandemic and the other a national outcry over systemic racism in policing.
Markets may have moved on, but the storm of scrutiny has left a lingering question: Why do lawmakers, who have easy access to nonpublic information and the power to shift markets, allow themselves to buy and sell financial stakes in companies in the first place? And should they continue to do so?
Most officeholders, including top Democratic and Republican leaders, say yes. They argue that placing limits on what lawmakers do with their retirement accounts and other savings would be unwarranted and unfair. A vast majority of members of Congress, after all, appear to follow the letter and spirit of the law that outlaws insider trading. When there are questions, as in the case of Ms. Loeffler — or Senator Richard Burr, Republican of North Carolina — the Securities and Exchange Commission and Justice Department can investigate.
But government ethics advocates and a small but growing bipartisan group of lawmakers sense an opening and are trying to make their move.
“Frankly, there is a lack of public trust that grows out of questions about whether or not members of Congress are gaming financial markets when they have insights as to what is going on in public policy,” said Representative Chip Roy, Republican of Texas. “There has been an increased recognition that it is difficult to give confidence to the American people that whatever we are deciding is fully divorced from our own personal interest.”
On Monday, Mr. Roy and Representative Abigail Spanberger, a moderate Virginia Democrat, introduced legislation that would require all members of Congress, their spouses and dependent children to put assets like stocks or commodity investments into blind trusts while they hold office, giving up control over how the money is invested for their full tenure.
Progressive Democrats like Representative Alexandria Ocasio-Cortez of New York and Senator Elizabeth Warren of Massachusetts have in recent weeks promoted even more drastic solutions, from bans on congressional stock trading to barring lawmakers from owning individual stocks altogether.
The idea is that even the appearance of a conflict — a senator writing aviation policy, say, who owns stock in Boeing — undermines the public’s already abysmally low trust in Congress and therefore its ability to legislate effectively. Congress, they point out, already makes similar conflicts of interest illegal for executive branch employees, and thousands of federal officials undergo ethics reviews each year that often require them to divest any financial interests they have in companies or industries that their work could affect.
For his part, Senator Mitch McConnell, Republican of Kentucky and the majority leader, said that each member should be allowed to invest as they saw fit.
“As for myself, I decided many years ago I was more comfortable not owning individual stock,” he said in a statement.
A review by the Campaign Legal Center found that between early February and early April, as Covid-19 roiled the markets and Congress approved about $2.8 trillion in relief programs that touched almost every corner of the American economy, 12 senators made 227 stock purchases or sales worth as much as $98 million. In the House, 37 members made 1,358 trades worth as much as $60 million.
“Multiple members are picking stocks and trading at the same time they are picking industry winners with a bailout,” said Kedric Payne, general counsel for the group who worked on the study.
Practical considerations are also moving other lawmakers to reconsider. Even if a lawmaker accused of insider trading, like Ms. Loeffler or Mr. Burr, can ultimately prove they acted legally and ethically, doing so can be costly.
As Ms. Loeffler found this spring, in a highly polarized political and news media climate, many voters are not waiting to see what lengthy investigations find. Ms. Loeffler decided along the way to divest her portfolio from almost all individual stocks and stepped down from a subcommittee that indirectly oversaw the company led by her husband. She conceded no wrongdoing but said, realistically, that her denials were simply “being ignored.”
“Maybe the bottom line is, if you’re going to be in the Senate you can’t own any stock. Or at least own mutual funds,” Senator John Cornyn, Republican of Texas, told Politico last month.
Congress last tried to address concerns about the financial interests of its members in 2012, when it passed the Stop Trading on Congressional Knowledge Act, or Stock Act. The legislation for the first time explicitly outlawed insider trading based on information lawmakers and their staff members learned in the course of official duties.
The Coronavirus Outbreak
Frequently Asked Questions and Advice
Updated June 12, 2020
Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Will protests set off a second viral wave of coronavirus?
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
How do we start exercising again without hurting ourselves after months of lockdown?
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
My state is reopening. Is it safe to go out?
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
How do I take my temperature?
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
Should I wear a mask?
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
How do I get tested?
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
The Stock Act also required lawmakers to disclose the purchase or sale of stocks, bonds, commodities futures and other securities within 45 days of transactions, rather than once a year, as they once did. The idea was that if sunlight shined in on congressional investments, it would discourage improper trading and make it easier to police questionable transactions.
But six years later, many criminal defense lawyers and ethics advocates have come to believe that it may simply be too hard to prosecute a member of Congress under the law for that demarcation to mean anything. Mr. Burr’s case, which has already escalated to include the seizure of his cellphone, may test that theory.
Other developments have shown that there are certain circumstances the law simply cannot reasonably reach. In early 2017, watchdogs demanded an investigation into Tom Price, a former Republican congressman from Georgia who served as Health and Human Services secretary, after it was revealed that he had invested more than $300,000 in health care stocks at the same time he was proposing and actively shaping health care legislation on an important House subcommittee on health.
Later in 2017, the independent Office of Congressional Ethics found that Representative Chris Collins, Republican of New York, might have violated insider trading laws by sharing nonpublic information about a biotech company on whose board he served. It also found that he most likely violated House ethics rules based on interactions with the National Institutes of Health while he served in Congress.
“The Stock Act was not strong enough medicine for the problem,” said Senator Jeff Merkley, Democrat of Oregon.
Mr. Merkley introduced legislation, the Ban Conflicted Trading Act, that would bar members of the House and Senate from trading individual stocks but not necessarily outlaw their ownership. In effect, lawmakers would have six months after their first election to Congress to make sales or swap what they wanted, but thereafter they would not be allowed to execute transactions.
Under Mr. Roy’s and Ms. Merkley’s proposals, lawmakers could still invest in mutual funds or exchange traded funds.
A House version of Mr. Merkley’s bill, introduced by Representative Raja Krishnamoorthi, Democrat of Illinois, has earned support from Ms. Ocasio-Cortez and at least one Democratic moderate representing a swing district, Representative Jared Golden of Maine.
Source: Elections - nytimes.com
