Financial Feminist - 190. Keeping Insider Trading and Financial Corruption out of Politics with Sen. Jeff Merkley

Episode Date: October 3, 2024

Ever wondered how insider trading impacts the laws that shape our lives? Well in today’s episode I'm diving deep into a conversation that could reshape our democracy. I sat down with Oregon's U.S. Senator Jeff Merkley to discuss the urgent need to ban congressional stock trading—a practice that not only undermines our trust in government but also impacts our daily lives more than you might think. Read transcripts, learn more about our guests and sponsors, and get more resources at https://herfirst100k.com/financial-feminist-show-notes/190-keeping-insider-trading-and-financial-corruption-out-of-politics-with-senator-jeff-merkley/ Senator Merkley’s links and resources: Learn more about the ETHICS Act  Learn more about the End Hedge Fund Control of American Homes Act Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz Register to vote: https://vote.org/ Special thanks to our sponsors: Thrive Causemetics Get an exclusive 20% off your first order at thrivecausemetics.com/FFPOD Squarespace Go to www.squarespace.com/FFPOD to save 10% off your first website or domain purchase. Masterclass Get an additional 15% off any annual membership at masterclass.com/FFPOD. Rocket Money Stop wasting money on things you don’t use. Cancel your unwanted subscriptions by going to RocketMoney.com/FFPOD. This is Small Business Check out This Is Small Business, an original podcast from Amazon, on your favorite podcast app.

Because it's really two forms of corruption here. One is we're getting information that public doesn't have so essentially insider trading so we shouldn't be trading stocks because that is unfair and Time and time again you see results where members of Congress do a little better than the general public how their stock trading Maybe it's because we get better information sooner that the public doesn't have I Know you're getting a lot of election content, but you got to stay with me. We're just going to kick it right off. There's no intro needed. You know who I am.

You know what the show is. Okay. Here's the thing. We've talked about it many times here on the show before on our social media platforms, but it is worth noting again, we're in the midst of election season. Don't have to tell you that we all know that. However, the presidential election is the sexy election, right? It's where all of the media goes to.

It's where all of the publicity happens, right? And that is the election most of us think of when we hear the word election. Super important. Who we elect to be president is incredibly important. Please register to vote, vote.org. And also, new paragraph indent, new paragraph. Here's the thing. If we want to actually be represented

as individuals and as a community, if we want to have policies in place that actually affect our day-to-day well-being and the ability for more national leaders to get stuff done, our local elections, I would argue, are as much, if not more, important. The president cannot do the things they're trying to do if the House of Representatives and the Senate is also not supporting those policies. We've had Amanda Litman on the show. I highly recommend listening to that episode. She talks about how important it is at the hyper local level to maintain and to vote for your school board because they determine what kind of education your children are getting. Coroners, fun fact, are often in an elected position. That blew my mind when she said it. And that coroner, especially in 2020, decided how many people actually died of COVID

and what the cause of death was, and therefore how many ventilators or how many vaccines were rolled out in that county. But also if a black man were to die at the hands of the police, the coroner decides what the cause of death actually was. These things are extremely relevant to us, to our tax dollars, to our schools, to the way we live our lives, right? And so with elections in full swing right now, yes, please dear God, vote in the presidential election.

If you're in a swing state, God, I need you to vote. Any Pennsylvania folks listening right now? I know you're getting all the ads. You're getting absolutely barraged. I know. And fuck the electoral college, but like our life is in your hands, Pennsylvania. Our life is in your hands, Pennsylvania. And also, local politics are as important, if not more so, but they don't get the media coverage. They don't get all of the sexy parts. So I'm really, really excited to talk with our guest today who is an incredible Senator from Oregon.

Oregon's US Senator, Jeff Merkley, has spent his career taking on the powerful to serve the people. In the Senate, he leads the fight to ban congressional stock trading for more than a decade. He is committed to advancing his ending trading and holdings in congressional stocks, which is called the Ethics Act, as well as filibuster reforms to make the Senate work again for ordinary Americans. Senator Merkley has also been a longtime leader on addressing the housing affordability crisis. Having previously led Portland's habitat for humanity, he knows what it means to families to be able to afford a safe home in their community.

He has also been called Oregon's roots and boots, Senator, because of his deep Oregon roots and his boots on the ground. In the Senate, he's laser focused on building the four foundations of success for working families. Good health care, quality education, decent affordable housing, and good paying jobs. In our time together, we discussed how politicians have been able to legally use a form of insider trading to line their own pockets. Yuck. No, thank you.

How this legalized corruption leads to elected officials who continuously disenfranchise their own constituents and what we can do to see legislation like the Ethics Act passed and hold our lawmakers accountable. So let's do it. Let's listen. But first, a word from our sponsors. We're so excited to have you. Thanks for being here. Oh, I'm delighted to be with you. Thanks for the invitation. One of our favorite questions to ask folks, because it's a financial podcast, is what

is your first money memory? What is the first time you remember thinking about money? My first memory is when my sister was able to open a bank account because she had learned to write her name. And my mother said, well, if you learn to write your name, you can open a bank account too. And the Umpqua bank will give you a little bronze chieftain piggy bank that you can put your coins into. I thought, well, that's pretty cool. I spent the rest of the day. So you said that and I was like, yeah, Umqua, know it. Did you get a one, the piggy bank? I did not get a piggy bank.

I feel like I missed out. Oh, you did. Yeah. I'll have to find one. I love talking to any sort of representative, you did. Yeah, I'll have to find one. I love talking to any sort of representative, but especially we've been joking internally as a team that the best politicians are the ones who'd never planned on being politicians. So you're called the roots and boots Senator, you were what people would consider an average American

before diving into politics. Can you talk about what that defining moment was for you when you were like, I want to run, I want to do this? You know, I was running a local affiliate for Habitat for Humanity. And I was proceeding to lobby the city council to say, hey, you're spending all your money on the city downtown. Why aren't you spending more on the neighborhoods? They're really being neglected. That's where the quality of life comes in. And none of them were interested because they had to run citywide. Their money came from developers to run their campaigns. And so the developers decided how the city money was spent. And I thought, you know, if I'm going to be effective on affordable housing, maybe I should be on the other side of the table. So the advocate coming in saying,

dear mayor, dear city councilor, don't you think we should be doing this? What if I'm in their seat and I can drive much more action? So that's when I started thinking about running for what turned out to be the state house. Do you feel like you're even better at your job because you do understand maybe what it's like for the average American and what it means to be a civil servant as opposed to people who maybe have existed their entire career in politics? Well, I think it is. There's several things I think that are valuable.

One, I come from a little tiny mill town. So I come from rural Oregon. Our family moved after an investor bought the stock to the company and then overnight sold it to a bigger company, made a profit, but immediately shut down the mill. And so we moved to a bigger rural town of Roseburg, Oregon, still timber country. And when jobs weren't prevalent there, my dad said, he was a mechanic and he said, you know, maybe I should look in a bigger market where the jobs don't keep disappearing. I've got to raise a family now. So we moved to the larger city.

I think that rural background and the fact that my family is a blue collar family, that familiar with the challenges that families were facing on healthcare and housing and education makes a big difference. And I must say right now, I'm dismayed by the number of billionaires that the Republican Party is recruiting in key states to run for the Senate in the states like Ohio and Pennsylvania and Maryland and Montana where folks who are billionaires, they lower the taxes on fellow billionaires as opposed to the fundamentals for families to thrive. And speaking of a lot of that, one of the biggest reasons we wanted to talk today is to talk about the Ethics Act.

So this is a pretty ambitious piece of legislation. For those of us who are just learning, can we break down what the Ethics Act would do and why it's such a crucial step in addressing conflicts of interest? This came up when the members of Congress, House and Senate were trading stocks and folks said, well, it looks like they're privy to inside information. And so let's write a new bill that says members of Congress who are already covered by the existing bill against insider trading, just restated a new bill. And I said, well, okay, two things wrong with that. One is we're not actually making a difference because we're already covered by the old

bill. But the second problem is insider trading is essentially extremely difficult to document, track and prosecute because who knows how somebody learned about something. And even I hear information all the time. I have no idea if it's inside information or if it's already in the public realm. Somebody's talking about what they're planning to do three to six months from now. And this has just come up time and time again. So I said, no, we shouldn't actually be trading in stock because there's really two forms

of corruption here. One is we're getting information the public doesn't have. So essentially insider trading. So we shouldn't be trading stocks because that is unfair. And time and time again, you see results where members of Congress do a little better than the general public on their stock trading. Maybe it's because we get better information sooner that the public doesn't have. But I really feel the second piece is even more corrupt, and that is while you are writing legislation or voting on amendments, you're thinking, oh, will this help renewable energy? I hold a bunch of renewable energy stocks.

Will this help fossils? I have a bunch of fossil stocks. In other words, it's corrupting, you your serving your portfolio rather than the public. And so on both these basis, the unfair advantage and information, but the corruption of your service to the people, both levels, it's unacceptable. So that's why Sheriff Brown and I proceeded to introduce an amendment. We only had 30 some votes in support of it. That was a long time

ago, over a decade ago. But slowly we've been building support for this concept, this recognition that is really a corruption of the public purpose for members to be trading in stocks. Well, and you mentioned a lot of the Republican push to either get billionaires into office or allow billionaires to influence the campaign. Was this an act that received bipartisan support? Well, we do have bipartisan support in the House and we have one Republican senator in support of the bill, Josh Hawley. And so that's progress. But in general, every time we've pursued this, the leader of the Republican side, Mitch McConnell, has discouraged his members from supporting it.

And why is that? Well, if you want to recruit someone like David McCormick, who is a billionaire hedge fund executive, or Eric Colvin, who is running in Wisconsin and he was a banker to the hedge funds and, equally, who are right up there at a similar level. Well, these folks have enormously complex financial lives, and they want to be trading in stocks and on the exchange stocks, probably off the exchange stocks, who knows. The last thing they want to do is to stop their personal serving, their personal portfolio. That's kind of what they've done for a living. They want to pursue. So how is he going to recruit these billionaires, these self-financing

candidates, if they can't trade stocks? So he's squelched it. Well, and you mentioned the Stock Act that was supposed to curb insider trading by just requiring this disclosure of stock trades by lawmakers. Why hasn't that been enough? And then why does the Ethics Act address those issues? Well, a couple things. Well, disclosure is good. No, so that's fine. That's advantageous. But that disclosure comes after the act. Yeah. And how are you going to go back and tie that act to the type of information somebody heard in a meeting with, you know, they're raising money, they're asking somebody to donate their campaign and they say, oh, and by the way, we're working on this merger with

such and such a company or we're working on this new invention. I've heard about some really cool, like almost sci-fi style inventions from people when I've been out raising money. And they're like, now this is under wraps right now. And I'm like, well, that's why I shouldn't be trading in stocks, right? I don't know if the public hasn't seen the information. It's still information. Yeah. So it didn't work in part because many people didn't report in a timely fashion. The fees have been minimal consequence for anyone of substantial means when they are fined. And disclosure is useful, but it doesn't stop you from getting that information in advance or thinking about your portfolio while you're voting or writing legislation.

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That's rocketmoney.com slash FFPOD, rocketmoney.com slash FFPOD. So you're mentioning the kind of resistance to this and, you know, we know how difficult it is to pass any sort of legislation. So if the Ethics Act doesn't pass as a standalone bill, how would you plan to push it through as part of other legislation and what are the chances that it becomes law during this session? So let's start with the challenge of getting a standalone bill to the floor. That requires in the Senate a procedure called cloture, which means you are closing debate

over whether to bring it to the floor, which means that any one person can force you to spend a week debating whether to bring a bill to the floor. And then once it's on the floor to close debate and hold a vote, you again need a super majority of 60 as long as one senator insists that you go through the formal rules. Now, these rules were set up with the idea that there'd be very rare – the social contract was simple majority and that this provision of several days of debate on whether something comes to the floor, several days of debate over closing debate on the floor, all these obstacles would be so rare. It happened once a year because the underlying ethic was we are a legislature where the majority

makes the decisions, not the minority. But as the tribal partisanship has increased, the minority party has proceeded to say we can use this rule to prevent the majority from ever getting anything done. They can't put the bill on the floor. And if they get it on the floor, they can't get it to a vote. Hey, we can paralyze them. And why not?

Our constituents would like us to paralyze that other party. And so this is why it will never make it as a standalone bill. Now, that means the only way to do this is why it will never make it as a stand-alone bill. Now, that means the only way to do this is as an amendment. Okay, so here we hit a second challenge, and that is all hundred senators have to agree to allow an amendment to be debated and voted on. So if you have the Republican leader saying, no, this will kill our efforts to recruit some billionaire to run for office, you're not going to get 100 senators agreeing. So that brings me to then, is there any path? And well, here is the path. There has to be a moment in which the

Republican party wants something so badly to be debated that I can hold that hostage in order to get a vote on the Ethics Act. That's the moment this can happen. And if this sounds like an incredibly dysfunctional Senate to your listeners, your listeners are correct. The Senate has become deeply dysfunctional in ways that favor the powerful over the people. It's driving frustration and cynicism. It's why we are not more successful

in acting on numerous issues involving what I call the four foundations for a family, healthcare, housing, education, a good paying job. America is being poorly served by this system in the Senate. Yeah. I don't even know how to, I'm just like, oh boy. I kind of went a long ways from the question you asked. No, no, no, but it's an important conversation. So, I mean, I just want to talk about really quickly, if there is somebody listening, and I'm thinking this, of like, okay, this does sound like

total dysfunction, what can I do about it? If I want this legislation passed, what can I do at the local level to advocate for it? Well, one is to create momentum. The House of Representatives doesn't have a super majority, so push your local House member to vote for it. Second is, advocate for a reform called the Talking Filibuster. And if anyone really wants to delve into it, I wrote a whole book on it last year called Filibustered. And, I mean, the point of this book is the Senate is broken, and if we're going to serve the people, we have to fix this system. And hey, here is a reform that would leave a significant voice and leverage with the

minority, but not a veto. And it's pretty simple and straightforward. It's like if you want to delay a vote, you have to hold the floor continuously. And when there's a break in the debate or everyone's exhausted, there are two-speech rule, then we get to vote on a bill. So the minority can hold up something for weeks. It gives them leverage. The majority doesn't want to be held up for weeks, so that makes them cooperative on a

compromise. But if there's no compromise, you can eventually get to a vote. And on small bills, if you have to hold the floor continuously, if the debate starts on a Thursday night, by midnight it's over, you come in on Monday and vote on a small bill. So we would restore the balance in which every Senator has a voice, but not a veto. Yeah. Very topical as we're recording this today. Former President Donald Trump has launched his own cryptocurrency platform. And I just want your thoughts about it.

How do you feel? We're 50 days before the election. One of our candidates is launching a new, I can say it, a new scheme, a new scam. How do you feel? Well, it just sounds so sleazy to me. And I think about other enterprises he's been involved in where he refuses to pay his subcontractors and then he says, you know, I can fight you in court

for 10 years, I'll pay you pennies on the dollar, but you have to sign a non-disclose agreement. Or his university where he was a non, it didn't teach anybody anything, it was a massive scam. But now crypto raises some important questions here of judgment. The first is you want to be leader of the free world, there's huge complex issues we're dealing with. Shouldn't you be like really diving in and understanding those issues, how you can take the world forward and making your case to the public, not launching some I want to profit for myself side scheme.

So there's that. But then there's also the fact that the biggest contributors to dark money in this election cycle is the crypto community. They are trying to buy Congress the same way the fossil fuel community buys Congress, the same way Wall Street or the drug companies buy Congress. And they've done it in a more bigger numbers, more cash than any other interest group in America this cycle. So here is Trump pandering to them, essentially saying through launching his World Liberty

financial crypto, hey, I'm going to be all in on crypto, spend your money on the Republican candidates. And so it has not gone unnoticed in that context. And I can say more about my concerns about crypto. I mean, I held the first ever crypto hearing when I was a member of the banking committee, and they had a sub-control and subcommittee. And the big issue that came up was on how it facilitates organized crime and money laundry. It also comes up now in our state, my home state of Oregon, a lot in terms of the amount of electricity it's eating up, which is a huge problem if you're worried about climate change and having enough renewable energy to power the planet without destroying it.

So there's a lot of pieces of his little crypto announcement. Senator, to wrap up our time together, why does your legislation and addressing corruption, especially financially, matter so much for a lot of our listeners who are women and who are young people? I came to the Senate as an intern where every senator had a superpower, which is they could put any amendment up, argue that this is good or bad for America. Of course, they're putting it up and saying it's good for America to be voted on. That's the Senate I believe in. That's the republic I believe in.

But right now, what we're facing is a system that's being damaged by many forces. One is the dark money. And that's the Citizens United decision that said that, hey, you and I, if we donate more than $200, we're fully disclosed to the public. So we'll get a million text messages afterwards. I'm sure your listeners have been getting a ton of those in this election cycle. But if you're a billionaire- I think I got three while we were talking. Oh, there we go. I have my phone at a distance, so it wouldn't be dinging every time you I think I got three while we were talking. I have my phone at a distance so it wouldn't be dinging every time you ask me a question.

So we have that challenge of the dark money being anonymous in our campaign system. We have the problem of the minority having a veto in the Senate. We have the fact that the wealthiest folks in America that have won influence, well, they have lobbyists, ordinary people don't. None of the folks back home in the mill town I grew up in have a lobbyist. The powerful have lawyers. They have media campaigns.

They have regular donations. They have dark money donations. If all that fails, they have the filibuster. In other words, they have all these tools. Now, here's one more piece of corruption on top of all of that where affluent people are coming here and why they should be working for the people. They're working for their portfolio. That's unacceptable. That's why we need to ban stock trading by members of Congress. I couldn't agree more. Senator, thank you for your time today. I really appreciate it. Our pleasure being with you. Thank you.

Thank you to US Senator Jeff Merkley for his work and for supporting our show by coming on. We really appreciate it. It was such an incredible conversation. Please vote. Vote.org. Call your legislators. Donate to causes and organizations and legislators you believe in. Have hard conversations. Volunteer. I phone bank almost every weekend. You can do this at vote save America.com. That's the easiest way to get signed up. There are ways that you can contribute beyond just voting if you feel helpless. That's my quick little hack for you, by the way. Every time I have felt helpless,

it happened this morning. I had a whole meltdown with our team this morning about a lot of things, but including the election. And every time I felt helpless and every time I feel like my vote's not gonna matter or I wish there was more I could do, I do more. I sign up to phone bank for even a half hour. I donate a little bit of money.

I post on social media. Like there are things you can do, especially if you're really, really nervous about what's gonna happen in the coming weeks. As of this recording, we have less than 50 days until the election. That's gonna be even less by the time this comes out. Please register to vote.

Make sure you check your registration, vote.org. Thank you again to Senator Merkley for being here. And thank you for your support of this show. Yeah, that's it. Have a great day. Bye, everybody. Thank you for listening to Financial Feminist, a Her First 100K podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristen Fields and Tamesha Grant, research by Sarah Shortino, audio and video engineering by Alyssa Medcalf, marketing and operations by Karina Patel and Amanda LeFeu.

Special thanks to our team at Her First 100K. Kaylyn Sprinkle, Masha Bakhmakeva, Taylor Chil, Sasha Bonar, Ray Wong, Elizabeth McCumber, Claire Karonen, Darrell Ann Ingman, and Megan Walker. Promotional graphics by Mary Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound. A huge thanks to the entire Her First 100k community for supporting the show. For more information about Financial Feminist, Her First 100k, our guests, and episode show

notes, visit financialfeministpodcast.com. If you're confused about your personal finances and you're wondering where to start, go to herfirst100k.com slash quiz for a free personalized money plan.