As Democratic lawmakers renew their push for a stock trading ban on Capitol Hill, an analysis released Wednesday found that several members of Congress or their close relatives sold bank equities last month as fears of a financial crisis spread in the wake of Silicon Valley Bank's collapse.
On March 10, the day SVB failed, Rep. Jared Moskowitz (D-Fla.) sold $65,000 to $150,000 worth of Seacoast Banking Corporation shares, according to disclosure data compiled by Capitol Trades.
The New York Times reported Wednesday that 48 hours after the Florida Democrat's stock sale, he "said in a television interview that he had attended a bipartisan congressional briefing on the tumult."
"And on March 13, as investors fretted over the failure of Silicon Valley Bank and two other, smaller banks, Seacoast Banking shares fell nearly 20%," the Times noted. "A spokesman for Mr. Moskowitz said in an email that the Seacoast share sales had been suggested by the congressman's financial adviser as a means to diversify his young children's holdings. Mr. Moskowitz said the congressional briefing on the bank crisis had taken place just before the television interview and after the shares were sold."
Moskowitz wasn't alone in selling his bank holdings as the run on SVB and its subsequent fall sparked concerns of contagion, prompting federal regulators to bail out the California-based firm—as well as Signature Bank—and effectively backstop the entire banking sector.
Citing Capitol Trades, the Times reported that Rep. Dan Goldman (D-N.Y.) "sold shares of First Republic Bank, the large depositor that was rapidly losing both cash and clients, on March 15, the day before it received an industry bailout of $30 million."
"The wife and children of Rep. Ro Khanna, Democrat of California, sold First Republic shares that same day," the Times continued. "Rep. John Curtis, Republican of Utah, sold shares in First Republic from a joint account with his spouse on March 16, the day the industry bailout occurred. By that time, First Republic shares had already fallen nearly 80 percent from a February peak. The timing of the sales by those three lawmakers or their relatives meant that the sellers averted an additional price swoon that was still to come."
"People need to have confidence that policymakers are making decisions based on what's best for the country, not what's best for their stock portfolios."
Details of the lawmakers' suspiciously well-timed transactions came a day after Sen. Jeff Merkley (D-Ore.) led a group of House and Senate members in introducing the Ending Trading and Holdings in Congressional Stocks (ETHICS) Act, legislation that would prohibit members of Congress, their spouses, and their dependent children from trading individual stocks.
Just one Republican, Rep. Michael Cloud of Texas, has cosponsored the new bill.
Sen. Sherrod Brown (D-Ohio), a longtime proponent of banning stock trading in Congress and a cosponsor of the ETHICS Act, said during a Tuesday press conference that lawmakers "were trading bank stocks" amid widespread turmoil in the financial sector last month.
"We know what position members of Congress can be in, and we know that the temptations are too great for some members of Congress to resist," said Brown, the chair of the Senate Banking Committee. "That's why this legislation is so important. People need to have confidence that policymakers are making decisions based on what's best for the country, not what's best for their stock portfolios."
Earlier this month, The Wall Street Journal reported that two lawmakers—Reps. Nicole Malliotakis (R-N.Y.) and Earl Blumenauer (D-Ore.)—"reported trades in bank stocks last month as they worked on government efforts to address fallout from two of the largest bank failures in American history."
"Malliotakis... bought stock in a regional bank before a subsidiary agreed to take over Signature Bank's deposits following its closure," the Journal reported. "Days before she bought the stock, she said she met with financial regulators to discuss the bank’s closure."
Blumenauer, who signed onto legislation that would impose stricter regulations on mid-sized banks, "reported selling between $1,001 and $15,000 in Bank of America stock on March 9, as panic was spreading and shares of the four biggest U.S. banks—including Bank of America—slid," the newspaper added. "A week after the sale, the stock was down 5%."
Adam Smith, vice president for democracy initiatives at Citizens for Responsibility and Ethics in Washington, tweeted Wednesday that "corrupt or not, stories like this make the institution look bad."
"We need to ban trading in individual stocks by members of Congress to begin to restore the public's faith in elected officials," Smith wrote.
This content originally appeared on Common Dreams and was authored by Jake Johnson.