With the support of powerful people, future MEMBERS of the US Congress may be banned from stock trading.
Recently, with the change in attitude of U.S. House Speaker Pelosi and the support of Senate majority leader Schumer for the ban, the bill to ban U.S. lawmakers and relatives from speculating in stocks is expected to make substantial progress. It is reported that the House committee is drafting rules, which are expected to be put to a vote within this year.
It is worth noting that not long before, the Fed had 3 senior officials lose their posts because they fell into the "stock speculation storm".
On Thursday, newly disclosed U.S. inflation data for January exploded, with the CPI up 7.5 percent year-on-year, a 40-year high, further reinforcing fed expectations for rate hikes. Affected by this, the three major U.S. stock indexes fell across the board, the Dow fell 526.47 points to close at 35241.59 points, down 1.47%; the Nasdaq fell 304.73 points, closing at 14185.64 points, down 2.10%; the S&P 500 index fell 83.10 points, closing at 4504.08 points, down 1.81%.
Technology stocks generally fell, the semiconductor sector led the decline, Qualcomm, AMD, NXP Semiconductors fell more than 5%, Xilinx, Asma and Nvidia fell more than 3%. In other tech stocks, Apple fell 2.34%, Amazon fell 1.36%, Netflix fell 1.6%, Google fell 2.1%, Facebook fell 1.69%, and Microsoft fell 2.84%.
New energy vehicle stocks fell collectively, Tesla fell nearly 3%, Xiaopeng Automobile fell more than 4%, and Weilai and Ideal Automobile fell more than 2%.
The United States may prohibit members of Congress from speculating in stocks
As early as September 2021, a storm caused by the "stock speculation" of senior Fed officials caused many officials to lose their posts. Fed Chairman Jerome Powell then issued a directive calling for a comprehensive review of the holding and trading of shares by senior Fed officials. The Fed also issued new rules prohibiting the trading of individual stocks and bonds for "their own people".
Today's U.S. ban on officials trading in stocks could be further extended to members of Congress. According to CNBC news on February 10, with the change in the attitude of House Speaker Pelosi and the support of Senate majority leader Schumer for the ban, the bill to ban US lawmakers and relatives from speculating in stocks may have made substantial progress.
According to the U.S. Senate statement, a bipartisan group of senators introduced a bill prohibiting members of Congress and their spouses from holding and trading individual stocks, bonds, commodities, futures and other securities, including equity in hedge funds, derivatives, options or other complex investment vehicles. The bill does not prohibit investment in ordinary and widely held funds, such as mutual funds and ETFs, as long as there are no conflicts of interest and are diversified.
Several versions of the stock trading ban are currently under consideration in the Senate, including one co-drafted by Democratic Senator Elizabeth Warren of Massachusetts and Senator Steve Danes, Republican of Montana. In addition, senators Jon Osoff and Mark Kelly also introduced a bill banning stock trading among members of Congress in January, according to the Capitol Hill newspaper.
Several bills introduced so far have reportedly required incoming members of Congress to place their stock portfolios in a traditional secrecy trust, managed by an independent trustee who can buy and sell shares without lawmakers' knowledge.
Take, for example, the proposal by Senators Jon Osoff and Mark Kelly, which prohibits members of Congress, their spouses and dependent children from trading stocks during their tenure. For existing stock investment transactions, the bill requires all incumbent members of Congress and their spouses and dependent children to transfer their shares in their names to a confidential trust within 120 days of the implementation of the bill. In addition, the bill requires new members of Congress to transfer their and their family's shares to a confidential trust within 120 days of taking office. After 180 days of the departure of a member, funds transferred to the Confidential Trust may be transferred out or liquidated. If a member of parliament violates the above-mentioned legal provisions, he or she will be fined the full salary of his/her deputy.
It is reported that the bill that Danes and Warren plan to propose goes further, even prohibiting lawmakers from holding stocks. That means newly elected members of Congress will be required to actually sell their holdings, regardless of whether such a sale is financially beneficial.
The current legislation for U.S. lawmakers to speculate in stocks is the Stop Using Congressional News Trading Act introduced in 2012, also known as the Stock Act. The bill stipulates that members of Congress may not use non-public information obtained in their positions to trade stocks for personal gain, and that members of Congress should disclose such information within 45 days of their financial transactions. Ironically, the law is effectively ignored.
According to the U.S. Business Insider website, members of Congress and their immediate family traded $631 million worth of stocks and financial assets in 2021, of which $267 million was bought and $364 million was sold. Of these transactions, 60% are stocks, with the rest being funds, bonds and other assets. Republicans prefer energy stocks, and Democrats prefer tech stocks. In addition, an investigation found that 49 members of Congress and 182 relevant senior staff members violated the Stock Act and failed to disclose transaction information in a timely manner in accordance with regulations.
Why did pelosi, the key figure, suddenly change his position?
As Speaker of the House of Representatives, Pelosi's statement is crucial. Previously, Pelosi was firmly opposed to prohibiting members of Congress from "speculating in stocks".
It is worth mentioning that according to foreign media reports, Pelosi's husband Paul Pelosi was named "Capitol Hill Stock God" because of his "excellent" ability to speculate in stocks. According to reports, Pelosi's husband, Paul Pelosi, often trades large amounts of stocks, and the stepping point is extremely accurate, almost stable.
In January 2021, before the Biden administration announced subsidies for electric vehicles, Paul bought millions of Dollars worth of Tesla stock; in March of the same year, Paul hoarded a batch of Microsoft shares at a low price, and soon there was news that Microsoft had obtained a $22 billion ORDER for AR combat helmets from the US Department of Defense, and the stock price then soared; in July of the same year, during the antitrust investigation of large US technology companies, Paul "reverse" google in the market, and the result was "sure enough", Google "is fine". And the stock price rose 20% after that.
According to the media, the Pelosi couple's return on investment in 2020 is as high as 56%, while Buffett's return on investment is 26% in the same period.
Despite being questioned, in December 2021, when Pelosi was publicly asked if she should restrict members of Congress from buying stocks, she was very adamant that members of Congress should not be barred from trading stocks because the U.S. is a "free-market economy." According to a poll at the time, 76 percent of the public believed that MPs and their spouses had an "unfair advantage" in the stock market, and only 5 percent of respondents favored MPs' stock marketing.
So why did Pelosi suddenly change her attitude and support the prohibition of "stock trading" among US congressmen?
In fact, Pelosi had previously opposed the U.S. Congress's desire to legislate against lawmakers trading stocks, and only changed her position last month.
Media analysts said that Pelosi's change of position is likely to be a combination of pressure from both The Democratic and Republican parties. For example, the current Senate majority leader Chuck Schumer announced his support for a ban and set up an intra-party discussion group to study the matter; while senior Republicans, including House Minority Leader Kevin McCarthy, also announced their support for the reform, and Kevin McCarthy himself said that if the Republican Party wins the House of Representatives in the midterm elections, he will personally propose a ban.
Pelosi also made clear after changing her position that she wanted the ban to include U.S. federal judges, that is, to keep the judiciary on the same standards as Congress.
A number of Fed officials were involved in the "stock speculation storm" and were forced to resign
Not long before that, 3 senior officials of the Federal Reserve were forced to resign one after another because they were caught in the "stock speculation storm".
The first is Boston Fed President Eric Rosengren. Previous information disclosed by the Boston Fed showed that Boston Fed President Rosengren was actively trading in the real estate investment market in 2020, holding real estate investment trusts worth between $151,000 and $800,000, which held mortgage-backed securities (MBS).
When the Fed bought nearly $700 billion in MBS, Rosengren made as many as 37 separate transactions across four REITs.
Dallas Fed President Kaplan's deal is even more compelling.
According to a financial disclosure form provided by the Dallas Fed, Dallas Fed President Kaplan made multiple stock transactions in excess of a million dollars in 2020. In total, Kaplan holds 27 stocks, funds or alternative assets, each worth more than $1 million, including Apple, Amazon, Boeing, Google's parent company Alphabet, Facebook (now renamed META) and Marathon Oil.
The data also shows that Kaplan sold or bought 22 company stocks or investment funds in 2020, involving Apple, Alibaba, Amazon, General Electric and Chevron, among others. He also bought and sold the iShares Floating Rate Bond ETF, which tracks the price of bonds under five years and is directly influenced by fed interest rate policies and expectations.
Kaplan has a strong financial background and has been president of the Dallas Fed since 2015. Prior to that, he worked for goldman Sachs for more than 20 years, a well-known investment bank, and was promoted to vice chairman, responsible for Goldman Sachs' investment banking business until his departure in 2006. In addition, Kaplan was a professor at Harvard Business School.
Compared to the relatively "low-key" and small number of transactions of most Fed presidents, the amount and frequency of Kaplan's transactions are very conspicuous. The financial activities of former Dallas Fed President Fisher have reportedly received a lot of attention, and Fisher has disclosed a large number of assets and transactions in a similar report, which is similar to Kaplan.
While Kaplan's deal is legal, it still raises questions among Americans about whether the Fed's moral standards have become too lax as its influence on the market has grown.
On September 16, 2021, Fed Chairman Jerome Powell subsequently issued a directive calling for a "new, comprehensive" review of the holding and trading of shares by senior Fed officials.
As the Fed officials' stock speculation has sparked heated discussions in the financial circles and received widespread criticism, several regional Fed presidents at the center of the whirlpool have had to take a stand to cool things down. Dallas Fed President Kaplan and Boston Fed President Rosengren issued nearly identical statements, pledging to sell their personal holdings by Sept. 30, 2021.
However, as the storm expanded, the two parties were verbally criticized, and Rosengren and Kaplan lost their posts. On September 27, Rosengren was the first to announce early retirement, and on the same day, Kaplan also announced his plans to leave office, leaving on October 8. Two senior Fed officials were forced to resign because of "stock speculation", which is the first time in history.
But the storm of senior Fed officials speculating in stocks did not end, after Rosengren and Kaplan resigned, then Fed Vice Chairman Clarida was subsequently exposed to personal trading the day before Powell officially announced policy action.
According to Bloomberg, the Fed's disclosure of financial information shows that the day before Chairman Powell issued an official statement that policy action may be taken due to the epidemic (February 27, 2020). Fed Vice Chairman Clarida liquidated a bond fund worth about $1-5 million from the Pacific Investment Management Corporation (PIMCO) and bought two equity funds, PIMCO's StocksPlus Fund and iShares MSCI's US Minimum Volatility Factor ETF. For the whole year of 2020, Clarida executed a total of 5 trades.
On January 10, 2022, Richard Clarida, who was deeply involved in the "stock speculation storm", also announced his resignation in advance.
In response, Democratic Senator Elizabeth Warren sent a letter to the chairman of the U.S. Securities and Exchange Commission (SEC) asking the SEC to investigate whether the personal investments of three Fed officials violated insider trading rules. Warren is also one of the drafters of the current regulations prohibiting lawmakers from trading stocks in the US Congress.
This storm of senior Fed officials "speculating in stocks" has a great impact. The Fed issued a statement on October 21, 2021, saying it would ban the agency's senior officials from buying and selling individual stocks and bonds, and the new rules would apply to the Fed's 12 regional Fed presidents and seven governors of the Washington-based Fed Council, as well as senior staff deeply involved in preparing for the interest rate decision-making committee meeting.
Under the new rules, there will be restrictions on the types of financial securities that senior Fed officials can hold, and they will be barred from buying individual stocks, holding bonds, and institution-backed securities. The new rules also require any transaction to be declared and approved 45 days in advance, and stipulate that investments should be held for at least one year and that fund transactions cannot be made during periods of "heightened financial market pressures."
What's the situation? American conference members speculate in stocks or are banned, and the position of big people suddenly turns, husband or "stock god"? The U.S. CPI grew at a 40-year high, with the Dow plunging 526 points
Source: Brokerage China