No stock answers for Congress’ trading problems

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Feb 08, 2022 View in browser   By Elana Schor Traders work on the floor of the New York Stock Exchange. | Spencer Platt/Getty Images CAPITOL GAINS — In the Senate, Majority Leader Chuck Schumer said today that he supports it, while Minority Leader Mitch McConnell said he's prepared to look at it. Speaker Nancy Pelosi has left the door open to backing it, and House Minority Leader Kevin McCarthy is said to be eyeing it. What is "it"? Across the aisle, momentum seems to be building for legislation that would restrict lawmakers' stock trading. How Congress got here is easy to understand. After heightened scrutiny of trades by members of both parties, including reported Justice Department inquiries into four senators, it became impossible to ignore the potential for politically perilous — if not truly illegal — stock-market plays by lawmakers who are often privy to privileged information that the average investor never gets. How Congress can fix the problem is more complicated. About a decade ago, members passed a law that requires disclosures of their trades, but that didn't stop several of them from landing in hot water thanks to spotty compliance. Now there's a flurry of proposals out there to rein in lawmakers' trades, so many that Schumer said today that he's asked his Democrats to "try to come up with one bill." The most frequently cited proposals would require members of Congress to choose mutual funds or other diversified investment options, while either divesting of individual stocks or moving them into "blind trusts." Blind trusts are designed to turn over control of investments to third-party trustees, who manage the money out of members' sight, and influence. But that hasn't stopped several politicians from running into tough questions over the years about how truly blind their blind trusts are, including former Senate Majority Leader Bill Frist (R-Tenn.) and Sen. Joe Manchin (D-W.Va.). Manchin's holdings in a coal brokerage steered by his son earned him $500,000 last year, according to financial disclosures. He has said he uses a blind trust for those holdings and adheres to Senate ethics guidelines. Yet the Washington Post has reported that the size of Manchin's disclosed blind trust doesn't seem to encompass the full scope of his reported earnings from the family business. Which gets us to the questions: Can Congress be trusted to set up its own blind trusts? And will the public be too, uh, blind to the contents of those trusts to tell what lawmakers are doing behind the scenes? Sen. Mitt Romney (R-Utah), who faced his own PR troubles over a blind trust during his 2012 presidential campaign, called the blind trust "an age-old ruse, if you will," during his 1994 Senate run . "Which is to say," he went on, "you can always tell the blind trust what it can and cannot do." Now, that's not a fair description of the current rules for blind trusts owned by federal lawmakers, which Romney wasn't subject to in 1994 because he was but a Senate candidate at the time. An FAQ produced in 2015 by the Senate ethics committee, which approves blind trust arrangements for the chamber, states: "When interviewing a trustee, the grantor may communicate his or her overall investment objectives for the portfolio, but may not communicate specific directions about how to construct or manage the portfolio." Even so, Frist ran into trouble in 2005 after reports emerged that he had delivered very specific instructions to his blind trust about selling stock in a family-founded hospital company, which would seem to fly in the face of that guidance. The Senate and House ethics committees may well have since tightened up their internal rules for approving blind trusts — but we haven't exactly seen press releases trumpeting that. That's because, though the House panel has made some strides since the establishment of the Office of Congressional Ethics, both chambers' internal ethics are known more for their opacity than their transparency. Given that truism about the ethics committees, putting all lawmakers' individual stock trades into the existing blind trust approval structure might shed less sunshine on lawmakers' investments, rather than more. And perhaps it wouldn't matter, if the majority of the members of Congress responded to a stock trading ban by simply selling their stocks or moving into mutual funds, as McConnell said he's recommended to his Republicans. The truth is, we don't know. But it's time to start asking whether more blindness, as it were, would help eliminate congressional conflicts of interest, or just make us blinder to them. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight's author at eschor@politico.com, or on Twitter at @eschor.   HAPPENING THURSDAY – A LONG GAME CONVERSATION ON THE CLIMATE CRISIS : Join POLITICO for back-to-back conversations on climate and sustainability action, starting with a panel led by Global Insider author Ryan Heath focused on insights gleaned from our POLITICO/Morning Consult Global Sustainability Poll of citizens from 13 countries on five continents about how their governments should respond to climate change. Following the panel, join a discussion with POLITICO White House Correspondent Laura Barrón-López and Gina McCarthy, White House national climate advisor, about the Biden administration's climate and sustainability agenda. REGISTER HERE.     What'd I Miss? — Congress inches 'real close' to government funding deal: Congressional leaders are zeroing in on a broad funding accord to set new totals for federal government spending into the fall. Top appropriators continued to close in on a bipartisan "top-line" deal today to set the overarching budget caps for military and non-defense agency spending, as well as ground rules for hashing out the details of a final package. Once they strike that compromise, spending leaders are expected to quickly wrap up a 12-bill bundle to fund the federal government through September. — Canadian truckers shut down busiest U.S.-Canada border crossing: A convoy of Canadian truckers and protesters objecting to Covid restrictions has caused Ottawa residents headaches for weeks. Now, they are disrupting the other side of the border. The Ambassador Bridge linking Detroit and Windsor, Ont., was closed to Canada-bound traffic today, according to the Michigan Department of Transportation and the Canadian government, and trucks were told to cross at another bridge 60 miles away. Cars and trucks initially blocked the approach to the bridge in Windsor on Monday, and other vehicles jammed the area in solidarity. — McConnell critical of GOP censure of Kinzinger, Cheney: McConnell said today that it's not up to the Republican National Committee to be calling out specific members of the party. "The issue is whether or not the RNC should be sort of singling out members of our party who ... have different views from the majority," McConnell told reporters, when asked about the committee's censure of Reps. Liz Cheney (R-Wyo.) and Adam Kinzinger (R-Ill.). "That's not the job of the RNC." Police officers wait outside Dunbar High School as members of the Metropolitan Police Department of the District of Columbia conduct an investigation of a security threat at the school. | Alex Wong/Getty Images — Emhoff whisked out of event following reported bomb threat: Doug Emhoff, the husband of Vice President Kamala Harris, was whisked out of an event today at a Washington high school by Secret Service agents following an apparent bomb threat. Emhoff was at Dunbar High School for an event in commemoration of Black History Month. He was in the school's museum for about five minutes before a member of his security detail approached him saying, "We have to go." Emhoff was removed from the building into his waiting motorcade. — House staffers confront reality of unionization: 'No one knows how it would work': While congressional staffers' talk of unionizing its long-overlooked workforce has suddenly accelerated, they're already crashing headfirst into the more complicated reality. Buoyed by an endorsement from Pelosi herself, dozens of senior House staff, mostly on the Democratic side, are searching for the next steps for their union drive. But it turns out that many of the problems with the Capitol as a workplace — notably, that there are more than 535 offices, each of which sets their own policies — are some of the same reasons it would be so tricky to collectively organize. — Hogan won't challenge Van Hollen for Maryland Senate seat: Gov. Larry Hogan made the announcement during a regularly scheduled news conference today, telling reporters he would remain focused on the job of governor until his term ends in January 2023, at which time Hogan will consider getting into the 2024 presidential race.   DON'T MISS CONGRESS MINUTES: Need to follow the action on Capitol Hill blow-by-blow? Check out Minutes, POLITICO's new platform that delivers the latest exclusives, twists and much more in real time. Get it on your desktop or download the POLITICO mobile app for iOS or Android. CHECK OUT CONGRESS MINUTES HERE.     AROUND THE WORLD WORLD ON CLIMATE CHANGE: UGH — A new POLITICO Morning Consult Global Sustainability Poll reveals frustration from citizens that they are being left to take on climate action on their own, when they believe governments and the companies with the most resources (which also tend to bear the most responsibility for carbon emissions) should shoulder the burden. Ryan Heath has the first numbers from the poll, and visit POLITICO tomorrow for more, including widespread agreement that companies must shoulder more of the cost in lowering carbon emissions. Nightly Number $4.5 billion The amount that went missing in a 2016 hack of a cryptocurrency exchange. The Justice Department announced the arrest today of a couple in New York charged with conspiring to launder stolen Bitcoin linked with the hack. Parting Words Civilians participate in a Kyiv Territorial Defense unit training session in Kyiv, Ukraine. | Chris McGrath/Getty Images FOOD FIGHT — International policymakers are looking with horror at the implications of a Russian invasion of Ukraine for global security and energy markets, but the consequences for world food supplies have attracted less attention than they deserve, Zosia Wanat and Sarah Anne Aarup write. Once the breadbasket of the Soviet Union, Ukraine is a farming powerhouse and conflict there would send instant tremors and price hikes through grain and food oil markets, just as European households are grappling with surging inflation. Ukraine is the EU's fourth biggest external food supplier and provides the bloc with about one-quarter of its cereal and vegetable oil imports, including almost half of its corn. A major food producer itself, the EU should probably be able to adapt to the immediate shock of a rupture in bilateral trade. The potentially greater strategic concern hinges on Ukraine's even more pivotal role as a supplier to the Middle East and North Africa. Analysts identify food supply as one of several significant underlying factors behind the Arab Spring revolutions that ignited a decade ago, and the EU has persistent fears about instability in its neighborhood. Egypt, for example, is a major buyer of Ukrainian grain. Did someone forward this email to you? Sign up here.   Follow us on Twitter Chris Suellentrop @suellentrop Tyler Weyant @tweyant Renuka Rayasam @renurayasam Myah Ward @myahward   Follow us

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