Financial conflicts of interest in the US government
Image: POGO
Since 2016, thousands of senior government officials in the executive branch have reported owning or trading stocks in companies that were directly affected by the decisions their agencies made, per a WSJ investigation published yesterday.
The executive branch covers the President’s Cabinet and most federal agencies, including the military – some 4 million employees in total. Though for the purpose of this story, only ~26,000 senior officials are required to file annual financial disclosures.
📂 A deeper dive… The Journal obtained and analyzed financial-disclosure forms from 12,000+ employees across 50 federal agencies. Overall, the publication found 2,600+ executive branch employees or their immediate family members (more than 1 in 5) disclosed stock investments in companies that were lobbying their agencies for favorable policies.
Some notable examples:
- More than 60 officials at five agencies, including the FTC and DOJ, reported trading stock in companies shortly before their departments announced new enforcement actions, like charges or settlements, against those firms – which often affects share prices.
- Over 200 senior EPA officials (nearly 1 in 3) reported investments in companies that were currently lobbying the agency.
- A DoD official bought shares in a defense company five times before it won a new contract from the Pentagon.
The Journal said in most identified instances, government ethics officials certified that the employees had complied with existing regulations, which have several exemptions allowing stock trades to bypass potential conflicts of interest.
🔄 On the flip side: Many of the agencies and officials involved were contacted by the WSJ over the course of its investigation. Some declined to comment, while others said those accused of financial conflicts of interest had either been punished or cleared upon review.
📊 Flash poll (long-form): How do you think the US gov't should deal with potential financial conflicts of interest among its employees?
See a 360° view of what the media is saying →
Sprinkles from the Left
- Some commentators argue that Congress should move to ban all federal officials from owning or trading in stocks due to the possibility that conflicts of interest will arise, and will affect lawmakers’ decisions to the detriment of the American public.
- Others contend that banning lawmakers from owning or trading stocks is simple common sense, and the fact that it isn’t banned already is indicative of the institutional rot present within the federal government.
- “House Democrats must end the scandal of congressional stock-trading” –WaPo Editorial Board
- “Stock-trading bans for Congress are common sense. So why won't they do it?” –St. Louis Post-Dispatch Editorial Board
- “Members of Congress Should Not be Trading Stocks, Ever” –NY Times Editorial Board
Sprinkles from the Right
- Some commentators argue that measures to ban US lawmakers from owning or trading stocks would only ensure that successful people stay away from public office, which would negatively affect the government as a whole.
- Others contend that top US officials trading stocks with minimal oversight is just another reason why the American public is gradually losing trust in our institutions.
- “The Democratic Stock Trading Ban” –WSJ Editorial Board
- “Americans don’t trust our institutions. Why would they?” –Rep. Andy Biggs (R-AZ)
- “The REAL reason Nancy Pelosi wants to keep trading individual stocks” –NY Post Editorial Board
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