A few short weeks ago, everything seemed like smooth sailing for the proposed congressional stock trading ban, the Stop Insider Trading Act, which was on track to pass with overwhelming bipartisan support.

Then, last week, some members jumped ship, claiming that the bill didn’t go far enough. It still ultimately cleared the committee on a party-line vote.

The bill will thus soon be considered by the full House. It would prohibit members of Congress, their spouses, and their dependent children from purchasing publicly traded stocks. Members would still be able to keep stock assets in investment and retirement funds holding broad categories of financial assets, but they would not be able to trade individual stocks. Most Americans support such restrictions. 

Members have voiced several objections, including that the bill would allow lawmakers to keep stocks they already own. 

Forced divestiture may have populist appeal, but it’s important to consider the unintended consequences. 

Supporters argue that the bill may prevent episodes like 2024’s Visa fiasco, in which one member’s husband unloaded around $500,000 in Visa stock when it was about to tank due to a flimsy and dubious Biden DOJ lawsuit alleging that the company exercised an illegal monopoly over debit card transactions. As the Daily Caller explained, that case, filed in the friendly Southern District of New York venue, as part of an effort to deflect blame for inflation to the private sector and away from the free-spending Biden administration.

However, the federal government already has laws against insider trading. If this was an example of such cronyism, it is already prosecutable under federal law. 

All that adding a retroactive divestiture requirement to a congressional stock trading ban would do is eliminate some of the nation’s brightest thinkers from taking on public service.  

Successful entrepreneurs with an interest in politics would likely choose not to run for office at all if it meant divesting stocks they planned to hold long-term. 

Candidate recruitment would become particularly difficult during economic recessions. 

For example, between October 2007 and March 2009, the S&P 500 lost around 50 percent of its value. Investors who focused on sectors like home construction and real estate lost even more. Forcing divestment in such circumstances would remove the ability of qualified candidates, both Democratic and Republican, from running at all. 

Public service usually involves financial sacrifice, but few successful people would stay in Congress or run for office if it meant divesting in a way that could wipe out a significant portion of their assets — especially when holding onto them for a few years would likely reverse any losses they incurred.

Scaring those candidates away would be a huge loss for the American people. 

Around 80 percent of U.S. millionaires are self-made. This means they didn’t inherit their wealth. They earned it by developing the same skills that will serve them well as legislators: discipline, team building, big-picture thinking, pattern recognition, strategic planning, and informed risk-taking. Voters can trust that these candidates have experience making high-stakes decisions and that those decisions have mostly paid off.

It is politically popular to bash the affluent, but economically successful people have long populated both federal and state governments. Congress has long had restrictions on holding outside jobs which earn income. Former Rep. Otis Pike (D., N.Y.) was a successful businessman, owning nursing homes on Long Island and retired from the House of Representatives in 1978 when strict limits on outside income were imposed. Pike wryly said that if “we pass this legislation without amendment, I will be judged too unethical to stay here.” 

But the public was concerned that Members of Congress should owe their full attention to the public’s business. Members of congress can also no longer earn money by giving speeches to special interest groups. That was also a good reform.

But is it in the public interest to force members of congress to divest themselves of assets which they obtained prior to their election? Should economic success become a bar to holding office? Do we only want to populate Congress with folks who might never be able to earn the $174,000 congressional salary in the private sector?

I think not. In our 250 years as a nation, government service has long attracted ambitious people who have achieved success in the private sector. Our Founding Fathers provide a prime example.  

Our most essential founder, George Washington, had a net worth which peaked at around $525 million in today’s dollars, Jefferson’s at around $240 million, and James Madison’s at around $115 million. Even John Adams, a modest New England lawyer and farmer compared to those aristocratic Virginia planters, was worth the equivalent of $21.5 million. Many presidents, cabinet officials, and members of the House and Senate in the past were wealthy individuals, some via entrepreneurship and others having created successful businesses. While we wouldn’t want high public officials to all be people of wealth, by the same token we should not exclude them from positions of leadership. 

If Congress goes too far in forcing Members of Congress to divest themselves of wealth and assets they earned prior to holding public office, it could prevent many of the people with the wisdom and foresight to shape good policy from running in the first place. And all the American people will be poorer for it.

Rep. John Faso is a former Member of Congress from New York.