While running for Congress last year, Republican Rob Bresnahan—like most Americans—hated the idea of lawmakers making money by trading individual stocks in elected office and said he wanted to ban the practice.
Then he won his race.
Now a congressman representing northeastern Pennsylvania, Bresnahan is one of the most active traders in Congress and is drawing political heat for some of the transactions, which he says are handled by an adviser who doesn’t consult him on trades. He recently suggested he wouldn’t follow through on his plan to put his investment portfolio in a blind trust as an ethical firewall. He hasn’t signed on to a leading House effort to restrict stock trading, instead introducing his own bill that ethics advocates and colleagues have said is weak.
When asked during a Scranton-area radio interview if he planned to tell his adviser to stop trading stocks to avoid backlash, he replied: “And then do what with it? Just leave it all in accounts and just leave it there and lose money and go broke?”
Hannah Pope, a spokeswoman for Bresnahan, declined to say whether he plans to follow through with his plans for a blind trust. She said Bresnahan’s trades are executed without his input.
“Any suggestion that Rob has involvement in his financial planner’s trades is complete and utter bulls—,” she said.
Many lawmakers decry stock trading on principle, only to back off later when faced with the practical impacts—ranging from transaction costs and taxes to annoyance over being told how to conduct their finances. While some are plowing ahead on ideas for new bans, passage remains uncertain after a history of failed efforts.
Proponents of a crackdown see trading as an obvious opportunity for corruption. Opponents note that insider trading is already illegal and say that new rules would discourage successful businesspeople from running for Congress.
Sen. Rick Scott (R., Fla.), one of Congress’s wealthiest members, with investments in private equity and hedge funds, in a recent hearing raised questions about how lawmakers would sell illiquid assets under a stock-trading ban. Scott, who hasn’t reported any stock trading this year, said supporters of a ban were insinuating that a lawmaker’s wealth is bad.
“This idea that we’re going to attack people because they make money is wrong,” he said. “We should cherish all of our different backgrounds.”
Rep. Gil Cisneros (D., Calif.), one of the most active traders in the House, said earlier this year that he opposes broad trading bans. He would, however, support restrictions on investing in industries that lawmakers oversee.
“I think our standards are too loose here,” he said. He added that his trades are handled by an outside financial manager….