At least nine members of Congress sold bank stocks before and during the market turmoil last month, including a member of the House Financial Services Committee who sold shares of Silicon Valley Bank before its bankruptcy.
Josh Gottheimer, a Democrat from New Jersey and a member of the Financial Services Committee since 2019, revealed the California bank’s stock sale made on March 9, valued at between $1,000 and $15,000, according to analysis of public disclosures by share sales by Quiver Quantitative. SVB crashed the next day, sending US bank stocks into a massive downward spiral.
He also reported sales made on March 6 and 14 of Charles Schwab stock of similar value. Schwab’s stock is down nearly 30% since March 7.
Gottheimer also announced the sale on March 29 of a position in Seacoast Banking, a Florida bank caught up in the upheaval, whose share price has fallen another 10% since the sale.
The swaps come as public advocacy groups question whether allowing government officials to hold or trade shares could present a conflict of interest with their official duties, even if they are required by law. law to disclose them.
Representatives for Gottheimer pointed to a statement from last year in which they said his financial decisions were made at the discretion of a third-party financial advisor.
“I do not believe members of Congress, judges, or any government employee in a political role, should be involved in the day-to-day trading of securities, including cryptocurrencies,” he said in the statement. . A representative said he was in the process of setting up a blind trust.
According to data from Quiver, Gottheimer’s filings make him one of the most active stock traders in the House of Representatives, with more than 380 trades last year.
Advocacy groups have argued that ownership of individual shares of the company presents a conflict of interest that erodes public trust. “It shows exactly why public trust in our elected officials is so low,” said Danielle Caputo, ethics counsel at the Campaign Legal Center, a campaign watchdog group.
“Whether or not you specifically run a specific trade under current laws, it doesn’t matter. You are ultimately responsible for these transactions, and that is why it is essential to prohibit members of Congress from benefiting from trading individual stocks.
Gottheimer is among a number of congressmen who sold shares in banks as turmoil gripped the sector last month.
Daniel Goldman, a House Democrat representing a New York district, sold a Schwab post worth between $15,000 and $50,000 on March 6 and on March 15 sold shares of First Republic San Francisco-based bank, which was battered by the SVB fallout. Shares of First Republic have more than halved since it was sold.
Jared Moskowitz, a Democrat from Florida, said he sold a position in Seacoast worth between $65,000 and $150,000 on March 10, the day its shares fell nearly 20%. The transactions were made two days after attending a congressional briefing on the banking crisis and were first reported by The New York Times. A spokesperson for Moskowitz told The Times that the stock sales were “suggested by the congressman’s financial adviser as a way to diversify his young children’s holdings.”
John Curtis, a Republican from Utah, and Earl Blumenauer, a Democrat from Oregon, also said they sold shares in the First Republic on March 15 and 20, as 11 major banks drew up plans to stabilize the lender with $30 billion in additional deposits.
A Goldman representative said, “Congressman Goldman is not involved in trading any stock in his portfolio, which is managed entirely by an investment adviser.” He is also in the process of setting up a blind trust.
Blumenauer and Curtis did not respond to requests for comment from the Financial Times.
While legislation to impose limits on congressional ownership or trading of individual securities has stalled in recent years, some lawmakers say support is growing for an outright ban on the practice.
“Members of Congress are supposed to serve the American people, not their stock portfolios,” Sherrod Brown, a Democratic U.S. senator from Ohio, said in a press release. He introduced a bill, which attracted 22 co-sponsors, that seeks to restrict the ownership of stocks, commodities and futures by members of Congress.
Current rules allow members of Congress to wait up to 45 days to report their transactions, so more transactions may still emerge.