Lawmakers and Stock Trading

An essential part of every democracy is the citizen’s trust in their elected representatives to do the right thing. But public trust in the U.S. government is nearing historic lows. A 2024 study found that only 22 percent of Americans who responded to the poll trust the federal government to do what is right most of the time.  

Now, a bipartisan group of lawmakers in Congress has introduced a bill to ban stock trading for its members. But what does this mean exactly, and how might a bill like this help restore public faith in the federal government? 

What Does It Mean to Trade Stocks? 

People use the stock market to buy and sell shares of stock in companies. The companies use the sale of their stocks to raise money that can be used for future investment and company growth. Buying a company’s stock makes you a small percentage owner of the company. So, if you hold stock in a company that makes money, the value of your stock may increase. If the company loses money, however, the value of the stock may decline, and you face the risk of losing money if you decide to sell the stock at a lower price.  

Because lawmakers are involved in writing laws and regulations that impact the economy, they have information about possible economic outcomes that regular citizens do not have. For example, lawmakers may know that the government is attempting to establish a regulation that opens up new foreign sales opportunities. If that lawmaker chooses to buy stock in a company based on that possible information, they have advance knowledge that gives them an possible economic advantage over regular investors. Worse, members of Congress could be tempted to make legislative decisions based on what could benefit their stock portfolio.  

Trading and Tariffs 

This issue has gained national attention after President Trump announced his first plan to establish tariffs on imported goods in early April 2025. On April 7, the stock market fell to the lowest point so far this year. On April 8, more than a dozen members of Congress made thousands of dollars’ worth of stock purchases. When the president announced that he was pausing those tariffs on April 10, the stock market rebounded with the biggest single-day gain since October 2008. All of those lawmaker’s stock purchases made when the market was low had a dramatic rise in value.  

It gave the appearance that some members of Congress benefitted from the timing of Trump’s pause in tariffs. The story further eroded American citizens’ trust in their elected leaders. 

What Does the Bill Say? 

There are two different versions of the bill being considered. The version being debated in the House of Representatives only applies to members of Congress. The Senate bill, on the other hand, includes members of Congress as well as federal employees in the Executive Branch.  

Both bills would apply the ban to the government employee, their spouse/partner, and their children. When someone makes the decision to run for Congress, they can either sell their stocks or allow these investments to be managed by a third party while they serve their time in government office.  

Some lawmakers have argued that if the bill passes, it will make people less likely to run for Congress. But supporters say that running for Congress is a choice; if you don’t want to give up control of your stocks, then the answer is simply not to run. 

The bill is bipartisan, meaning that it is supported by both Republicans and Democrats. However, in the House, Republican leadership has been slow to bring the bill to the members for a vote. Supporters of the bill say they will give the Republican leaders until the end of September to bring the bill to vote. If that doesn’t happen by then, the supporters have measures in place to force a vote anyway. 

What Do You Think? Imagine that you are a member of Congress. Would you vote in favor of the bill to prevent government officials from stock trading, or would you vote against it? Explain your decision.