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Many believe it's time to do away with lawmakers making stock trades

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Re: Many believe it's time to do away with lawmakers making stock trades

#211

Post by kristjansson »

Of all the ways for a congressperson to transform her access and power into personal wealth, trading on inside information is close to socially optimal. It’s basically victimless (unlike graft), doesn’t necessarily[1] distort incentives toward good policy or law (unlike accepting bribes), and doesn’t impose a direct cost on taxpayers (like increasing salaries).

If we can’t foreclose all of the avenues from power and access to wealth, we should let them have the least harmful one and clamp down on the others. Hell, we should give them a million on margin and at the start of their term.

Note that the simple solution of ‘less venal congresspeople’ is outside feasible region.

[1] obviously concentrated positions could distort policy choices, but they could be prevented from holding more than x% in one name for more than y quarters of disclosure.

Re: Many believe it's time to do away with lawmakers making stock trades

#212

Post by kristjansson »

b3morales wrote: post #150
whywhywhywhy wrote: post #55

I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their f…

U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? --- *They also have a baked-in-statute annual cost of living adjustment, which is more than we can say for the vast majority of people in the country. Though they have voted not to take it for the last decade. (If they had, I believe the current salar…

Conversely, why does it make sense that the people we ask to make decisions governing the disposition of literally trillions of dollars get paid as much as a 24 year old starting at Sidley?

Re: Many believe it's time to do away with lawmakers making stock trades

#213

Post by SkyMarshal »

giantg2 wrote: post #123
pclmulqdq wrote: post #111

Earlier quoted context omitted.

I think the cleanest law here is to change the law to clarify that non-public information gained by public servants and representatives that can have an affect on a stock's price should be treated as "material non-public information." Then the SEC can do their jobs like they do with other insider traders. Remember that ONLY elected congresspeople are exempt from rules like that. Other public servants are not. This is…

I'd go a step further and restrict them to index funds. Even just holding a stock could affect their judgement. So they might not trade it to their benefit, but they might make the wrong policy decision for the country.

> I'd go a step further and restrict them to index funds.

Or alternatively, restrict them to govt debt only. Make sure they have direct skin-in-the-game for the debt they're responsible for managing.

Re: Many believe it's time to do away with lawmakers making stock trades

#214

Post by mgkimsal »

DavidPeiffer wrote: post #202
mgkimsal wrote: post #91

Earlier quoted context omitted.

I mostly take your point(s), and really... $3m is not a large amount for someone who's worked and been moderately diligent about finances. You don't need to have insider knowledge or bend the rules to have saved $3m over 60 years. BUT... $310/month back in 1950 was a lot of 'savable' income for most working people. Most manufacturing workers in mid 1950s were earning under $2.50/hr - even assuming some overtime, mont…

Totally understand, and I was doing a bit of hand waving in the original comment. 7% is around the inflation adjusted, long term S&P 500 return, meaning $310/month would need to be adjusted for inflation over that timeframe. Converting 2020 dollars (because times are weird right now) to 1960, it comes to about $35.50/month. On $500/month income, that's a 7% savings rate.

AHA - makes far more sense now. That pesky old 'adjusted for inflation'.

Re: Many believe it's time to do away with lawmakers making stock trades

#215

Post by nzealand »

ckardat123 wrote: post #105
ramblenode wrote: post #88

Before the STOCK Act passed, Congress outperformed the market by 20%, with some senior Republican leaders doing as well as 35% [0,1]. Before the pandemic began in the US, 4 US Senators were picking up medical stocks after closed-door briefings. Investigations were opened by the DOJ, but they were all dropped. [0] https://www.theatlantic.com/ideas/archive/2020/03/congress-i... [1] https://onlinelibrary.wiley.com/doi/1…

If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in…

Does it measure performance vs the market?

E.g. If I followed Nancy Pelosi's disclosed trades on the day that she disclosed them in accordance with her minimum allocations, I would outperform S&P 500 by 7.7% pa?

Btw, I think something is wrong with your calculations for Derek Kilmer. The poor chap is trading index funds and somehow is performing worse than just about anyone else.

Re: Many believe it's time to do away with lawmakers making stock trades

#216

Post by nzealand »

quickthrowman wrote: post #182
ckardat123 wrote: post #105

Earlier quoted context omitted.

If anyone is interested, I've been building dashboards that display trades made by U.S. congressmen and estimate their returns over time from their trading while in office. https://www.quiverquant.com/sources/senatetrading https://www.quiverquant.com/sources/housetrading One weakness of the performance visualization is that some of the most extreme results are from people who have only made one or two trades while in…

> and estimate their returns over time from their trading while in office. Sorry, but there is no possible way to do this with any sort of precision or accuracy with a 45 day lag time on reporting trades.

The disclosures include the date the trade was made. The only ambiguity is the amount invested.

Also, estimate precision or accuracy :)

Re: Many believe it's time to do away with lawmakers making stock trades

#217

Post by 93po »

bencollier49 wrote: post #138
ArchStanton wrote: post #127

I have no problem with lawmakers making stock trades, but you can certainly argue that it is immediately made public. To be fair, there are probably edge conditions where a congressman has direct control over the financial realities of a publicly related company. I think the more heinous cases are lawmakers becoming lobbyists and (worse) lawmakers making huge bucks on public speaking which is a very thinly veiled bit…

Came here to say the same thing. Trades by lawmakers should be instantaneously public.

They'd just use shell corporations or friends/family in that case. The only people who would still trade under their name have nothing to hide to begin with and aren't the problem we're trying to solve.

Re: Many believe it's time to do away with lawmakers making stock trades

#218

Post by giantg2 »

SkyMarshal wrote: post #213
giantg2 wrote: post #123

Earlier quoted context omitted.

I'd go a step further and restrict them to index funds. Even just holding a stock could affect their judgement. So they might not trade it to their benefit, but they might make the wrong policy decision for the country.

> I'd go a step further and restrict them to index funds. Or alternatively, restrict them to govt debt only. Make sure they have direct skin-in-the-game for the debt they're responsible for managing.

Hahaha that's awesome. I bet they would abuse that too though

Re: Many believe it's time to do away with lawmakers making stock trades

#219

Post by pirate787 »

s1artibartfast wrote: post #168
b3morales wrote: post #150

Earlier quoted context omitted.

U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? --- *They also have a baked-in-statute annual cost of living adjustment, which is more than we can say for the vast majority of people in the country. Though they have voted not to take it for the last decade. (If they had, I believe the current salar…

>U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? This is less than a fresh college grad working at FAANG or Big Law. Google starts around 190 [1], and big law starts at 205k [2] I think this comes down to what incentives we want in place. Do we only want smart people who are willing to sacrifice in…

Actually what you get are rich people who don't need the low salary.

Re: Many believe it's time to do away with lawmakers making stock trades

#220

Post by whywhywhywhy »

b3morales wrote: post #150
whywhywhywhy wrote: post #55

I'm completely fine with politicians being paid significantly more if them, their partners and their relatives faced serious prison time is they did the sort of insider trading that is considered completely normal and weirdly they're allowed to do but it's illegal if the lowly plebs do it. End of the day these people are paid very little on paper for the amount of pressure and responsibility yet if you follow their f…

U.S. Reps and Senators have an annual salary of around $180,000*, which is in the order of twice the national median income. Why do you think they need to be paid more? --- *They also have a baked-in-statute annual cost of living adjustment, which is more than we can say for the vast majority of people in the country. Though they have voted not to take it for the last decade. (If they had, I believe the current salar…

>U.S. Reps and Senators have an annual salary of around $180,000

Literally nothing for the stress and pressure they endure, I'm a designer who doesn't get out of bed before 10:30, at most works hard for 4 hours tops and earns $136,000 which I also think isn't much in 2021. Politicians deserve more but I also want them and their partners or children in solitary confinement for decades if a single one of them insider trades to earn more.

Pay politicians 3 million a year or even more I don't care it's a drop in the bucket compared to the millions they funnel through garbage charities, favors and programs just to skim cream off the top. Pay them an absolute fortune but the second they insider trade or try to skim cream solitary, lethal injection, firing squad I don't care. they're scum.

I don't think this in unreasonable and I'm happy to pay them an extremely competitive salary just for living within these restrictions and auditing their entire linage to make sure they are too.

At this point this is the only way I can envision honest government existing. Think I'm wrong? Google "Nancy Pelosi Husband stock trading" her husband is "earning" more than I'm suggesting just insider trading of her privileged information.

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