Why It Matters

The U.S. House passed the Stop Insider Trading Act, H.R. 7008, by a vote of 232-198 on Wednesday, July 22. Thirteen Democrats joined all 218 voting Republicans in their support, while 198 Democrats voted no. The bill, introduced by Rep. Bryan Steil (R-WI) in January, would largely bar members of Congress, their spouses, and their dependent children from purchasing individual stocks in publicly traded companies.

The Big Picture

Critics argue the bill does not fully deliver what its title suggests. Lawmakers could keep stocks they already own, sell those holdings with 7 to 14 days' advance notice, automatically reinvest dividends into the same firm, and buy stock for their parents under the assumption it would become part of an inheritance. The bill also does not apply to the White House or the Supreme Court, does not stop lawmakers from making policy that raises the value of their own portfolios, and does not address investments in private companies such as SpaceX or OpenAI.

Good-government groups, including Citizens for Responsibility and Ethics in Washington, the Project on Government Oversight, the Campaign Legal Center, and Public Citizen, have pushed for a stricter alternative, the Restore Trust in Congress Act, which would require full divestment, not just a ban on new purchases, from members of Congress and their immediate families, with penalties reported as high as 10 percent of an investment's value. During Rules Committee consideration of H.R. 7008, Democrats twice tried and failed to substitute in broader alternatives, including a companion measure that would also restrict the President and Vice President. Separately, a discharge petition tied to a similar stock-trading ban has drawn 84 bipartisan signatures, short of the 218 needed to force a floor vote.

Rep. Scott Perry (R-PA), a cosponsor of H.R. 7008, said that owning no stock and backing a trading ban reflects being a "servant leader," not personal enrichment. House Speaker Mike Johnson (R-LA) praised the bill's passage as a step toward restoring public trust in Congress and noted that 198 House Democrats voted against it.

The Bottom Line

H.R. 7008 now heads to the Senate, where its fate is less certain. Twice in the Rules Committee, Democrats tried to swap in tougher versions, including one that would have also restricted the President and Vice President, and both attempts died on party-line votes. Trump has already signaled he would veto anything that limits his own investing.

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