As Fears of Banking Crisis Surged, Members of Congress Sold Bank Shares
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Stock trading by members of Congress came under scrutiny once again, after at least eight lawmakers or their family members sold shares of bank stocks in March, according to an analysis by Capitol Trades. An investment account belonging to the children of Representative Jared Moskowitz reported a sale of Seacoast Banking Corp (SBCF:US) shares worth $65,000 to $150,000 on March 10, just after two days of attending a bipartisan congressional briefing on the banking crisis. He spoke about this briefing in a television interview and said that the government was working to control the crisis.
Though broadly legal, trading by lawmakers has always been a controversial topic because they are undoubtedly closer to information regarding regulations and policies they oversee. An NYT investigation in 2020 showed that nearly a fifth of federal lawmakers or their immediate family members had bought or sold stocks or other securities that could have been affected by their legislative work.
Keeping a view on the questionable trades by politicians, Rep. Dan Goldman, a New York Democrat, made headlines by selling shares of First Republic Bank (FRC:US) on March 15; the day before it received a bailout of $30 million. Around the same time, Rep. John Curtis and Rep. Ro Khanna laid off FRC shares. These trades were made by their family members or through joint accounts.
Continuing the immaculate trades, Rep. Nicole Malliotakis, bought shares of New York Community Bancorp (NYCB:US) on March 17. Two days later, the bank bought assets belonging to the failed Signature Bank (SBNY:US), which led to a whopping rally in its shares.
The recent incidents of stock trading by lawmakers and their family members have once again brought the controversial issue to the forefront. Despite being legal, the close proximity of lawmakers to sensitive information makes it difficult to believe whether the trades are ethically sound. The issue requires strengthening of policies and altering regulations to maintain public trust in the government.
