The Preventing Elected Leaders from Owning Securities and Investments (PELOSI) Act is a proposed law that aims to stop Members of Congress and their spouses from owning or trading certain financial assets while in office. This bill seeks to prevent conflicts of interest and insider trading by ensuring that lawmakers cannot profit from nonpublic information.
What This Bill Does
The PELOSI Act introduces several key changes to how Members of Congress can manage their financial investments. It prohibits them and their spouses from buying, selling, or holding most types of financial instruments, such as stocks, commodities, and derivatives, while they are in office. However, there are exceptions for some low-risk investments like diversified exchange-traded funds (ETFs) and U.S. Treasury securities.
Current Members of Congress would have 180 days from the bill's enactment to sell off any prohibited investments, while new Members would have the same timeframe from the start of their term. To ensure compliance, Members must certify annually that they are following the rules, and any profits from violations must be paid to the U.S. Treasury. If they fail to divest in time, they face civil fines that increase every 30 days.
The bill also requires ethics committees to oversee the process, providing guidance and publishing compliance certifications and fines online. Additionally, the Government Accountability Office (GAO) would conduct an audit within two years to ensure the rules are being followed.
Why It Matters
This bill could have a significant impact on public trust in government. By preventing lawmakers from using insider information for personal gain, it aims to restore confidence that elected officials are working for the public good, not their own financial benefit. This is especially important given past concerns about lawmakers trading stocks based on nonpublic information.
For everyday Americans, this bill could level the playing field. Currently, Members of Congress have access to information that could give them an unfair advantage in the stock market. By requiring divestment, the bill seeks to ensure that lawmakers are not profiting at the expense of ordinary citizens.
Key Facts
- Cost/Budget Impact: The bill is expected to have minimal new costs, as it relies on existing ethics committees and the GAO for enforcement.
- Timeline for Implementation: Provisions would take effect immediately upon the bill becoming law, with divestment required within 180 days.
- Number of People Affected: All 535 Members of Congress and their spouses would be directly impacted by the bill.
- Key Dates: Introduced on May 14, 2025, and currently referred to the House Committee on House Administration.
- GAO Audit: A compliance audit by the GAO is required within two years of the bill's enactment.
- Spouse Inclusion: The bill explicitly covers financial transactions by spouses, closing potential loopholes.
- Potential Market Impact: Concerns exist about the market impact if all Members of Congress divest simultaneously within the 180-day window.
Arguments in Support
- Prevents Conflicts of Interest: By banning Members from trading certain financial assets, the bill aims to eliminate the risk of insider trading and conflicts of interest.
- Restores Public Trust: The bill's transparency measures, like public certifications and fines, are designed to increase accountability and trust in government.
- Levels the Playing Field: By removing the advantage lawmakers have with insider information, the bill seeks to create a fairer market for all Americans.
- Strong Enforcement: The bill includes significant penalties for non-compliance, which supporters believe will deter violations.
- Reasonable Exceptions: The bill allows for some low-risk investments, ensuring that it does not overly restrict financial freedom.
Arguments in Opposition
- Overly Restrictive: Critics argue that the bill's broad restrictions could harm lawmakers' personal finances by forcing them to sell off valuable investments.
- Burden on Families: The bill also affects spouses, which could complicate family finances and lead to unintended consequences.
- Enforcement Challenges: Opponents worry about the potential for politicized enforcement and the added bureaucracy involved in overseeing compliance.
- Deters Public Service: Some believe the bill could discourage talented individuals from running for office due to the financial restrictions.
- Existing Laws Adequate: Critics argue that current laws, like the STOCK Act, already address insider trading concerns, making this bill unnecessary.