Naming, shaming Texas’ congressional stock-pickers
Quick quiz: What proposed congressional ethics rule changes do hard-right conservative Chip Roy (Republican of Texas), hardleft progressive Alexandria Ocasio-Cortez (Democrat of New York) and hard-centrist financial columnist Michael Taylor (that’s ME!) all agree on?
If you answered “ban individual stock trading by members of Congress (and their families)” you win the prize.
I think the approach Chip, Alexandria and Michael should take is to bring this up as often as possible and name and shame stock-trading members of Congress on a regular basis.
A year ago, it seemed 2023 was the year this conflict of interests issue would get fixed. Polling showed a proposed ban on members of Congress participating in the stock market had overwhelming public support on a bipartisan basis — 86% shared almost equally by Republicans and Democrats. Finally, something everyone can agree on!
Members’ trades have long raised questions because it’s such an obvious avenue for insidertype trading, either because of special access to information through regulatory duties, subpoena power or committee assignments. Roy put it this way last year: “We don’t want to be projecting to the American people that we are somehow making decisions when we are doing our job here that are connected to our own profit, our own personal financial stake.”
Outgoing House Speaker Nancy Pelosi, D-Calif., was perceived as an obstacle to progress on this issue in part because her husband had an active business that involved buying and selling large volumes of stocks. But a year ago, she indicated her support for a ban or reform. Also a year ago, incoming House Speaker Kevin McCarthy, R-Calif., had come out swinging to end stock trading by members of Congress. Alas,
Michael Taylor
McCarthy got distracted, then ousted, and I have no sense of whether this is a priority for House Speaker Mike Johnson, R-La.
Memories of former Speaker Pelosi’s controversial non-leadership on congressional stock trading resurfaced when a December disclosure showed she (actually, her husband) had purchased one-year call options on superhot stock chipmaker Nvidia. Pelosi had previously sold more than $4 million worth of Nvidia in mid-2022, after which the price roughly quadrupled. So, not a good trade. Still, it shouldn’t be allowed.
Chip, Alexandria and I aren’t the only ones calling for change in 2024. In mid-January, two dozen lawmakers wrote to Johnson and House Minority Leader Jeffries asking for a vote on this issue. “This is a critical step to ensure Members of Congress are working for their constituents, not themselves,” they wrote.
Since we’ve had this problem for another year, my only recourse is to once again name and shame stock-picking members of the Texas delegation.
Rep. Michael McCaul
Michael McCaul, R-10th District, is believed to be the wealthiest member of the House, worth hundreds of millions of dollars mostly from his wife’s family fortune. Each month he discloses hundreds of trades — primarily for his spouse or dependent children’s accounts. His monthly average of 175 disclosed trades are heavy on municipal bonds, Treasury bonds and money markets but with a regular smattering of individual stocks and funds. The majority of disclosed trades are small, which doesn’t make much sense given the scale of their family fortune.
The volume of trading he discloses every month implies that a money-management firm is making decisions on his behalf, making each trade seem less likely to be driven by insider knowledge. Still, two criticisms remain.
First: If he were involved in conflicted or insider trading based on his position in Congress, the high number of trades would serve to obscure any particular conflict of interest. Because his account is traded a lot, how would we know that he isn’t sometimes cheating?
Second: Couldn’t he just achieve the same results by turning over his fortune to a blind trust during his years of service? Doing so would eliminate the possible perception of a conflict of interest. This is what many of the wealthiest members of Congress have done. To not do so seems obstreperous. It invites criticism. You open yourself up to shaming by someone like me.
I’m sure he’d be wealthier — because most anyone would be — if he just pursued a buy-and-hold strategy. Has nobody told
McCaul about the consistent research showing the clear outperformance of long-term holding versus short term trading? Trading like this is tax-inefficient, he pays more in fees, and isn’t actually beating the market.
Anyway, congressman, give me a call. I could help steer you to manage your money in much simpler ways than whoever is churning your account constantly. It’s not helping you to preserve your wealth or be an ethical role model for your Texas constituents.
Rep. Michael Burgess
Michael Burgess, R-26th District, upped his volume of trading in 2023 from 2022. He sometimes buys and sells the same stock on the same day, which is either day-trading or wash-trading. One is highly inadvisable (day trading) while the other is illegal (wash trading, in which a trader buys and sells a security to feed misleading information to the market). Other times Burgess trades within the same month, which is not daytrading but is also generally considered unwise.
He also frequently buys stocks and then sells one-month call options on the same stock, a strategy known as a “buy-write.” This strategy is popular with the kind of pseudo-sophisticated investor who used to follow latenight infomercials but who now often follow YouTube hucksters.
I just want to say to Rep. Burgess, like, what are you doing, man? There are only three possibilities. First possibility: You are trading every month on a bunch of shares about which you know very little but which give the illusion of control and “smart gambling.” But if that’s the case, is your job in Congress not interesting enough that you need to fill the void by rapid trading of public shares of stocks and selling call options on them?
Second possibility: You actually do “know something” that’s given you an edge. But that is precisely what a congressional ban on stock trading should address. You should not be allowed to have an edge.
Third possibility: The trading is being done by an external financial advisor who loves the “buy-write” strategy in which case, man, you’re just paying someone a lot of money to churn your account and you should really look into that.
Rep. Pete Sessions
Pete Sessions, R-17th District, did a lot of trading in 2023, more than double what he did in 2022. The highlight of Pete Sessions’ stock trading was on Oct. 31 (Halloween!), in which he sold blocks of The Procter & Gamble Co., Lockheed Martin Corp., and McDonalds Corp. worth more than $100,000 each.
He also accumulated five shares total throughout the year in Nvidia. But in retrospect, Sessions should have bought more Nvidia, like Pelosi’s husband did. Isn’t it ironic that this super hot stock’s name, pronounced in Spanish, means “envy?” How’s that FOMO feeling working out for you?
Rep. Lloyd Doggett
Lloyd Doggett, D-District 37, has the most reasonable stock picking approach of the Texas delegation in the sense that he purchases the same boring six names (every month, for years!) and never sells. These are IBM Corp., The Home Depot Inc., Johnson & Johnson, Procter & Gamble, PPG Industries Inc., and The Coca Cola Co. Your basic American basket of staid blue chips, it’s all very Warren Buffett-like. This is admirable from an investor-wisdom perspective. Nothing to make fun of there.
On the other hand, do I think there’s tech, retail, pharma, materials, and consumer-industry issues that come before Congress constantly and that it would be better if Doggett did not consciously or unconsciously understand that the decisions he makes, and the votes he takes, could in some respect affect his personal investment portfolio? Absolutely.
He could achieve his same investment goals without the implied conflict of interest by owning shares via broad-based mutual funds or in a blind trust. Kudos to quitters
Special kudos for 2023 go out to Reps. August Pfluger, R-11th District, Vicente Gonzalez,
D-34th District, and Patrick Fallon, R-4th District, for not trading any stocks in 2023 after each made some trades in 2022. They kicked the habit.
Special mention also due to Rep. Dan Crenshaw, R-2nd, as “most improved.” His only disclosed trade in 2023 was a single purchase of an S&P 500 ETF. This was much better than 2022, when he approached the stock market like a degenerate gambler, buying and selling a 3x-levered bank ETF, plus shares in tech stocks Google, Apple, Amazon, Meta, and casino company
Wynn.
111,235 pedestrians, city data shows. Eagle Pass alone engaged $34.67 billion in international trade in JanuaryNovember 2023. The city, with 29,000 people, is the 10th busiest border crossing in the country. Texas-Mexico trade totaled $515 billion last year.
Too many people imagine border towns as dusty little one-stoplight hamlets where men wearing sombreros wrap themselves in blankets for siesta. Or they believe hatemongers like Lt. Gov. Dan Patrick, who echo 19th century racist tropes about people from south of the border.
“This is an invasion from Third World countries.
They’re coming here with health issues, they’re uneducated, unemployed and all they do is commit crime on the streets,” he told Fox News on Wednesday.
What Patrick failed to mention is that 8% of the Texas workforce is undocumented, Pew Research reported in November. The Texas Senate, miles.
Abbott’s seizure of 2.5 miles of border proves the point. He ordered National Guard troops to take over a city park and place shipping containers and concertina wire along the river. He deployed a 100-yard death trap in the water.
Migrants keep wading anyway, trying to find an opening and begging for help. They walk to a break in the barrier, approach a border patrol officer and ask for asylum.
Ending the crisis requires far more sophisticated solutions than fencing. Solutions
which he leads, has never passed legislation to punish businesses for hiring them because key industries would collapse without them.
The borderlands are among the most economically vibrant areas in Texas. Most of the rhetoric about enforcing immigration law, whether Republican or Democratic, sounds silly once you drive along the banks of the Rio Grande.
There is a wall that stretches for miles, but gates are left open to grant Texans access to their U.S. property sandwiched between the wall and the river. Wetlands and mountains make fencing impossible along many stretches of the 1,200-mile Texas-Mexico border.
If you want an idea of what it looks like, Getty photographer John Moore, who I embedded with during the 2003 Iraq Invasion, has documented every mile from San Diego to Brownsville. As a former soldier, war correspondent and frequent “la linea” visitor, I can assure you no government can seal any border longer than a few dozen
also require congressional action.
Congress must grant Biden legal authority to reject faulty asylum claims. If migrants believe the U.S. will turn away illegitimate claims, they will not come.
Secretary of Homeland Security Alejandro Mayorkas needs more money to hire 1,600 asylum officers, 1,300 border patrol agents and 1,000 homeland security investigators. The administration has asked for $16 billion to improve enforcement.
However, the GOP wants independent voters to talk about immigration rather than abortion rights, the Democrats’ favorite wedge issue. As politicians say, never let a crisis go to waste. But the truly sad part is the human suffering that will persist while Congress bickers.
Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonhchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.