WASHINGTON — Members of the U.S. House and U.S. Senate were required by law to file their annual financial disclosure reports last week, showing wide disparities in wealth and also raising the question: Should lawmakers be authorized to trade shares?
A bipartisan rush earlier this year to limit stock trading by members of Congress has stalled. Representative Dean Phillips, D-3rd District, said he was disappointed the effort was met with resistance from his colleagues, but he thinks there will eventually be new investment safeguards from lawmakers on Wall Street.
“Nothing happens quickly in Congress,” Phillips said.
Bipartisan support for limiting stock trading has been fueled by a number of incidents, including revelations that several senators made chance trades before the American people were fully aware of the seriousness of the COVID-19 pandemic. which was about to disrupt economies around the world.
Following questionable exchanges by members of Congress, Phillips said, “People have lost faith in public servants.”
Dozens of lawmakers have introduced bills revising or updating the STOCK Act of 2012 that currently governs lawmaker transactions and public disclosure. The proposals include everything from boosting the transparency of lawmakers’ financial disclosures to outright banning stock trading by members of Congress and — in some cases — their immediate families.
The STOCK Act requires members of Congress to disclose the purchase or sale of stocks worth more than $1,000 within 45 days of any transaction, but dozens of lawmakers have violated that deadline.
Phillips, by far the wealthiest member of Minnesota’s congressional delegation and one of the wealthiest members of Congress, is among a dozen lawmakers who have chosen to tackle the issue by putting his assets in a qualified blind trust. This means that a fund manager buys and sells his shares and other assets without his direction.
Phillips, representing Ilhan Omar, D-5e District, Angie Craig, D-2n/a District and Betty McCollum, D-4e District, are co-sponsors of the TRUST in Congress Act, a bill that would require members of Congress and their families to establish qualified blind trusts for their assets.
“Members of Congress should focus on their jobs, not their investment portfolios,” Phillips said.
Still, Phillips acknowledges that setting up a blind trust is “tedious, expensive and time-consuming” and that many of his colleagues aren’t wealthy enough to make it practical or reasonable. He thinks colleagues who aren’t wealthy should invest in mutual funds or index funds instead, avoiding any trading of individual stocks.
“The challenge is to get it right,” Phillips said. “It doesn’t have to be a one-size-fits-all solution.”
Craig prefers that lawmakers hold no shares. She sold all of her individual shares before taking office in 2019.
“Members of Congress have access to a lot of information,” Craig said. “Even the appearance of impropriety by one member of Congress diminishes the credibility of all members of Congress.”
Phillips, however, said he disagreed with Craig that there should be a total ban on stock trading in Congress.
“I agree with her on a lot of things, but not on this,” he said.
Meanwhile, Sen. Amy Klobuchar, D-Minn., has signed a Senate bill that would require members of Congress to sell all stocks, treasury bills, options contracts and derivatives they possess within six months of the promulgation of the bill or after taking office. Lawmakers could, under the bill, transfer their assets to a blind trust and can still invest in most retirement accounts.
Like legislation in the House, the Senate bill that would limit stock trading has languished.
A delegation wealth gap
Each year, members of Congress must declare their assets and debts, but only an overview of their assets and debts is made public. The value of certain assets, such as their principal residences, does not have to be disclosed.
Klobuchar and Sen. Tina Smith, D-Minn., met the May 16 deadline to file their financial disclosure reports. In the House, Reps. Pete Stauber, R-8e, Omar and Phillips have all requested extensions, giving them an additional 90 days to file reports. The Clerk of the House has not yet made available to the public any other reports that may have been tabled before the deadline.
But available information from previous years shows large differences in wealth among members of Minnesota’s congressional delegation. According to his 2020 report, Phillips, a business magnate and liquor heir, has assets worth tens of millions of dollars.
Although Craig does not own individual stocks, she has reported at least $5 million in holdings in mutual funds, bonds and other investments. Craig also listed bank accounts worth between $600,000 and $1.25 million. And, according to her 2020 financial disclosure report, the former St. Jude Medical executive also said she owns a condo in the Mexican resort town of Playa del Carmen worth between $250,000 and $500,000.
Other Minnesota lawmakers appear to have more modest means — with large mortgages, student loans and other debt.
In 2020, Omar reported few assets, a student loan between $15,000 and $50,000, and Chase Bank credit card debt between $10,000 and $15,000.
Rep. Michelle Fischbach, R-7e District, also said he owes between $60,000 and $115,000 on a student loan.
Meanwhile, McCollum reported a mortgage on his St. Paul home worth between $100,000 and $250,000 and another on his Washington, D.C. home worth between $250,000 and $250,000. $500,000.
Representative Tom Emmer, R-6e District, said he had a mortgage worth between $200,000 and $500,000.
In his 2021 report, Smith said he owed a mortgage taken out the previous year worth between $500,000 and $1 million.
Meanwhile, Stauber, whose family owns a hockey store in Duluth, reporter holds personal guarantees on business loans worth between $1.2 million and $5.5 million.
In his 2021 financial disclosure report, Klobuchar said he earned $13,478 in royalties from his book, “Taking on Monopoly Power from the Gilded Age to the Digital Age.” She also listed a number of retirement accounts and mutual funds, mostly in her husband’s name.
The base salary for a congressman is $174,000 a year, an amount that hasn’t changed since 2009.