GOP stock trading ban bill clears committee, Dems oppose

A Republican-backed bill to ban members of Congress from buying new stocks survived an initial procedural hurdle Wednesday, despite Democrats’ complaints that the legislation doesn’t go far enough.

The bill was approved along party lines in the House Administration Committee, with seven of the panel’s GOP members voting for it and all four of its Democrats opposing it.

“Your member of Congress should not be day trading stocks,” said Rep. Bryan Steil, R-Wis., who chairs the committee and introduced the bill, in an interview with CNBC before the vote.

“You want to day trade? There’s a place for that, and it’s called Wall Street,” Steil said.

House Majority Leader Steve Scalise, R-La., previously told CNBC that he would bring the bill to a floor vote if it was approved in the committee.

It’s unclear if the bill will be able to pass the full House, where Republicans hold a razor-thin and at times fractious majority.

Democratic members have said Steil’s bill doesn’t do enough to prevent insider trading among lawmakers.

All of their amendments to the legislation were shot down in the committee.

Steil’s bill is, effectively, a watered-down version of previous efforts to ban insider trading among lawmakers.

The measure would allow members to keep the stocks they owned when they were elected. Members could sell stocks, as long as they gave public notice seven days before the sale. Lawmakers would be able to buy and sell commodities, futures, and diversified funds, and could use dividends of stocks to purchase more shares of stocks they own. 

Steil’s bill would also increase fees for violations, ratcheting up fines to $2,000, or 10% of the value of transaction, whatever is greater, or the net gain from the transaction. 

Rep. Joe Morelle, D-N.Y., the Administration Committee’s ranking member, called the bill a “quarter measure.”

“This is a way to get people to believe that we’ve resolved the issue,” he told CNBC during an interview in the Capitol. “There’s too many ways to get around this. It essentially says, if you have great wealth, and you come to Congress, you can continue to have great wealth. And that’s not what we want.”

Steil brushed off concerns that the legislation didn’t go as far as others, saying that killing any bill that was deemed “not quite good enough” would prevent progress on the issue.

“It’s what I call the Goldilocks argument. The porridge is too cold. The porridge is too hot,” he said. “This is an opportunity to say yay or nay. Do you believe your member of Congress should be trading stocks while they’re in elected office?”

Democrats are coming up with their own plans. Morelle said he intends to file a discharge petition to force a vote on a bill from himself and Rep. Seth Magaziner, D-R.I., that would not only prevent members of Congress from trading stocks, but the president and vice president as well.

— CNBC’s Kevin Breuninger and Caleigh Keating contributed to this report.