Congress has long suffered from a reputation for being more interested in padding pockets than solving Americans’ toughest problems.
Perhaps there’s no more glaring example of the conflict of interest in Washington, DC, than the ability for elected members to actively buy or sell shares in publicly traded companies that could be sent soaring or reeling by legislation and spending decisions.
Many believe that elected officials should be barred from trading stocks. Others have started using publicly released information on their trading to influence their own investing decisions.
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Nancy Pelosi is perhaps the most followed active investor in Washington, DC, but she’s far from the only person buying and selling individual stocks. The list crisscrosses political parties.
This week, Treasury Secretary Scott Bessent delivered a strong message on members of Congress owning individual stocks, explicitly calling out Representative and former Speaker of the House Pelosi and Oregon Senator Ron Wyden.
Treasury Secretary Bessent offered up a hard-nosed take on Congress trading individual stocks.
Image souce: Bloomberg/Getty Images
Congress’s stock trading problem is widespread
This is far from the first time that owning stocks or other investments has raised eyebrows among voters.
A study of the 117th Congress in 2021 found that 53% of Congress members owned individual stocks and only 7% didn’t own any stocks or widely held investment funds, such as mutual funds, according to the Campaign Legal Center.
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Only 2% used a qualified blind trust (“QBT”), which creates a firewall between investments and members of Congress, preventing them from knowing their investments.
Stock ownership is widespread across both political parties, with 54% of Republicans and 46% of Democrats owning stocks as of 2021.
Those findings include trades by Congress members, spouses, and dependent children, including buys and sells made by Pelosi’s husband, whom she says handles their investing.
While Pelosi’s trading disclosures are closely watched, partly because of her husband’s past prescient options investments in high-tech stocks, her portfolio was far from the best-performing in Congress last year.
Unusual Whales tracks buys and sells by members of Congress via periodic transaction reports (PTR) filed within 45 days of any investment over $1,000.
In 2024, the S&P 500 returned nearly 25%, including dividends. However, according to Unusual Whales estimates, Democrats returned 31% on average, due mainly to tech stocks, while Republicans gained 26% on average, largely thanks to financials and commodities.
Since PTR filings aren’t provided in real time, Unusual Whales has to make assumptions, which could mean their estimates are off the mark.
Still, according to its calculations, its estimated returns for the top 10 members of Congress in 2024 are pretty eye-popping and likely to make many investors jealous:
Representative David Rouzer, Republican, North Carolina: 149%.Representative Debbie Wasserman Schultz, Democrat, Florida: 142.3%Senator Ron Wyden, Democrat, Oregon: 123.8%Representative Roger Williams, Republican, Texas: 111.2%Representative Morgan McGarvey, Democrat, Kentucky: 105.8%Representative Larry Bucshon, Republican, Indiana: 98.6%Representative Pete Sessions, Republican, Texas: 95.2%Senator Susan Collins, Republican, Maine: 77.5%Representative David Kustoff, Republican, Tennessee: 71.5%Representative Nancy Pelosi, Democrat, California: 70.9%
Secretary Bessent takes issue with Congress owning individual stocks
On August 13, the Office of Government Ethics reported that Treasury Secretary Bessent, a Wall Street veteran trained under the legendary hedge fund manager Stanley Druckenmiller, had yet to fully divest holdings as promised in an ethics agreement signed in January.
Bessent responded by saying he’s liquidated over 90% of the $1 billion holdings and that the remaining holdings are illiquid farmland that will be liquidated by year’s end.
The disclosure renewed debate over what politicians and executive branch members should be allowed to own as investments.
Bessent delivered a blunt take on the matter.
“I am pushing for a ban on single-stock trading in Congress,” wrote Bessent in a post on X, formerly Twitter.
Perhaps, unsurprisingly, given his role in the Trump Administration, he specifically called out Democrats Pelosi and Wyden.
“The American people deserve better than politicians like @RonWyden
and @SpeakerPelosi
with hedge-fund level returns,” wrote Bessent. “Public service should be about serving the people, not getting rich.”
“If any private citizen traded this way, the SEC would be knocking on their door,” said Bessent.
Whether Bessent’s support for a ban results in actionable legislation remains to be seen, given that proposals have won mixed support in Congress over the past few years; however, none of them have become law.
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