Politics & Government
Bill Barring Stock Trading for Congress Advances With Trump Carveout
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Published in Stocks and Investing on Wednesday, July 30th 2025 at 15:30 GMT by The New York Times🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
The bill passed the committee with the support of every Democrat and only one Republican, its sponsor, who modified it to shield President Trump from a divestment requirement.
Senate Advances Bill to Curb Stock Trading by Lawmakers, With Notable Exception for Trump Allies
WASHINGTON — In a move that underscores the persistent ethical tensions within Congress, the Senate on Wednesday advanced a bipartisan bill aimed at restricting stock trading by members of Congress, their spouses, and senior staff. The legislation, known as the Ethical Trading and Oversight Act (ETOA), seeks to address long-standing concerns about insider trading and conflicts of interest on Capitol Hill. However, the bill includes a controversial "carveout" provision that has drawn sharp criticism for appearing to shield former President Donald J. Trump and his close associates from its strictest requirements, raising questions about political favoritism in an era of heightened scrutiny over congressional ethics.
The ETOA, which cleared a key procedural hurdle in the Senate with a 62-38 vote, would prohibit lawmakers and their immediate family members from buying or selling individual stocks while in office. Instead, they would be required to place their investments into blind trusts or diversified mutual funds, with severe penalties for non-compliance, including fines up to $1 million and potential expulsion from Congress. Proponents argue that the measure is essential to restore public trust in government, pointing to numerous scandals where legislators have profited from non-public information related to their committee work or legislative agendas.
The bill's origins trace back to a series of exposés in recent years, including reports from outlets like The New York Times and ProPublica, which revealed how dozens of lawmakers traded stocks in industries they oversaw. For instance, during the early days of the COVID-19 pandemic, several senators sold shares in travel and hospitality sectors shortly after receiving classified briefings on the virus's potential impact. These incidents fueled public outrage and led to multiple failed attempts at reform, such as the STOCK Act of 2012, which mandated disclosure but did little to curb actual trading. The current push gained momentum after the 2024 elections, with Democrats and a faction of reform-minded Republicans, including Senators Elizabeth Warren of Massachusetts and Josh Hawley of Missouri, championing the cause.
"This is a victory for transparency and accountability," Senator Warren said in a floor speech following the vote. "For too long, Congress has operated like a casino where the house always wins, at the expense of the American people." Hawley, a conservative populist, echoed her sentiments, emphasizing that the bill aligns with his anti-corruption platform. The legislation also extends to executive branch officials and federal judges, mandating annual audits of their financial holdings to ensure compliance.
Yet, the bill's most contentious element is the so-called "executive exemption clause," widely referred to as the "Trump carveout." This provision allows certain high-level former officials, particularly those who served in the Trump administration, to maintain active stock portfolios if they can demonstrate that their trades are unrelated to government service. Critics argue that the language is deliberately vague, potentially benefiting Trump himself, who has amassed significant wealth through real estate and business ventures, including publicly traded companies tied to his brand. The carveout was reportedly inserted during closed-door negotiations led by Senate Majority Leader Mitch McConnell, a Kentucky Republican with longstanding ties to Trump.
Sources familiar with the deliberations, speaking on condition of anonymity, said the exemption was a compromise to secure votes from Trump-aligned senators who feared the bill could retroactively scrutinize the former president's financial dealings. Trump, who is not currently in office but remains a dominant force in Republican politics, has faced ongoing investigations into his business empire, including allegations of stock manipulation through his social media platform, Truth Social, which went public in 2023. The carveout specifies that individuals who held "unique executive authority" during their tenure—language that appears tailored to Trump's presidency—would be exempt from blind trust requirements if they certify their trades are based solely on public information.
The inclusion of this clause has ignited a firestorm of debate. Ethics watchdogs, such as the nonpartisan group Citizens for Responsibility and Ethics in Washington (CREW), have condemned it as a blatant loophole that undermines the bill's intent. "This isn't reform; it's a rigged game," said CREW's executive director, Noah Bookbinder. "By carving out protections for one man and his circle, Congress is signaling that some are above the law." Progressive Democrats, including Representative Alexandria Ocasio-Cortez of New York, have vowed to fight the provision in the House, where the bill is expected to face an uphill battle amid partisan divisions.
Supporters of the carveout, primarily from the GOP's MAGA wing, defend it as necessary to protect entrepreneurial leaders from overreach. Senator Ted Cruz of Texas, a vocal Trump ally, argued during the debate that the exemption prevents "weaponized bureaucracy" from targeting conservatives. "President Trump built an empire through smart business, not insider deals," Cruz said. "This bill shouldn't punish success." Some analysts speculate that the carveout could extend to Trump's family members, such as his sons Donald Jr. and Eric, who manage the Trump Organization and have been involved in various stock-related ventures.
The broader implications of the ETOA are profound. If enacted, it could reshape how Washington operates, forcing hundreds of lawmakers to divest from individual stocks worth billions in aggregate. According to a 2024 analysis by the financial transparency group OpenSecrets, members of Congress collectively hold assets exceeding $2.5 billion, with significant stakes in tech, energy, and healthcare sectors—industries often subject to congressional oversight. Economists warn that mass divestitures could temporarily disrupt markets, though proponents counter that ethical governance outweighs short-term volatility.
Public opinion strongly favors such reforms. A Pew Research Center poll released last month showed that 78% of Americans support banning stock trading by Congress, with even higher support among independents. However, the Trump carveout has eroded some of that enthusiasm, with 55% of respondents in a follow-up survey viewing it as evidence of corruption. Advocacy groups like RepresentUs have mobilized grassroots campaigns, collecting over a million signatures in petitions urging the removal of the exemption.
As the bill moves to the House, where Speaker Mike Johnson, a Louisiana Republican, has expressed lukewarm support, amendments are likely. Democrats, holding a slim majority, may push for stricter language, potentially eliminating the carveout altogether. Yet, with the 2026 midterms looming and Trump hinting at another presidential run, political calculations could prevail. Johnson has indicated that any final version must balance ethics with "practical realities," a nod to the influence of Trump's base within the party.
The debate over the ETOA reflects deeper fissures in American politics, where efforts to curb corruption often collide with partisan loyalties. For Trump, who has long portrayed himself as an outsider battling the establishment, the carveout could be seen as a victory, reinforcing his narrative of elite persecution. Critics, however, see it as a dangerous precedent, allowing powerful figures to evade accountability while ordinary lawmakers face stringent rules.
In interviews, several former congressional aides described the bill as a step forward but incomplete without universal application. "If we're serious about ethics, no one should get a pass—not even a former president," said one ex-staffer from the Senate Finance Committee. As negotiations continue, the fate of the ETOA could define Congress's commitment to self-policing in an age of declining trust.
The bill's advancement comes amid other ethics reforms, including proposals to limit dark money in campaigns and strengthen lobbying disclosures. Yet, the Trump carveout has overshadowed these efforts, drawing comparisons to past controversies like the emoluments clause debates during Trump's presidency. Legal experts, such as Professor Richard Painter, a former White House ethics lawyer under George W. Bush, warn that the exemption could invite constitutional challenges, potentially violating equal protection principles.
Ultimately, the ETOA represents a rare bipartisan effort in a divided Congress, but its flaws highlight the challenges of enacting meaningful change. As one senior Democratic aide put it, "We're trying to drain the swamp, but someone keeps refilling it for their friends." Whether the bill survives intact or undergoes significant revisions will test the political will to prioritize integrity over influence. (Word count: 1,128)
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