At least five members of Congress in mid-March dumped their personal stock shares in now-defunct First Republic Bank — trades that potentially saved the lawmakers or close family members thousands, if not tens of thousands of dollars, according to a Raw Story analysis of congressional financial records.
Reps. Lois Frankel (D-FL), Ro Khanna (D-CA), John Curtis (R-UT), Earl Blumenauer (D-OR) and Dan Goldman (D-NY) each sold their shares between March 15 and March 20 as the bank’s credit rating eroded, stock price tumbled and depositors fled.
The lawmakers’ timing of the trades — four of the five bailed out of First Republic Bank stock while share prices still hovered in the $31-to-$35 range down from February highs in the $140s — allowed them to avoid additional losses beyond what they had already experienced. First Republic’s stock traded below $4 a share by the time JPMorgan Chase bought the failing bank earlier this week.
Their trades also coincided with broader bank-related action on Capitol Hill, with Congress fretting over the economic implications of Silicon Valley Bank and Signature Bank imploding and spooling up investigations into their failures.
While there’s no evidence that the lawmakers used information they obtained through their public service to inform their First Republic stock trades, such stock sales “can erode the public’s faith and confidence in Congress,” said Aaron Scherb, senior director of legislative affairs for Common Cause, a nonpartisan government watchdog organization.
“The perception of corruption can be just as damaging as actual corruption in many cases,” said Scherb, noting that a bipartisan coalition of lawmakers have introduced bills that would ban members of Congress and their immediate family members from trading individual stocks at all.
Why lawmakers sold First Republic shares
Khanna’s stock trade disclosures list the owners of the stock as his wife, Ritu Khanna, and their dependent child.
“Rep. Khanna does not own any individual stocks and is a co-sponsor of the TRUST in Congress Act to ban congressional stock trading,” a spokesperson for the congressman told Raw Story. “His wife has assets prior to marriage in a diversified trust managed by an independent third party, which per OGE rules eliminates any conflict. The periodic transaction reports publicly filed show that the First Republic transactions were very small relative to the portfolio and sold at a loss days after the steep fall. All trades have been disclosed.”
The trades listed as being for a child are from “a diversified trust that the family of Rep. Khanna’s wife set up for their grandchildren over which Rep. Khanna has no involvement or control.” Khanna valued the trades at between $2,002 and $30,000 — lawmakers are only required by law to disclose the value of their stock trades in broad ranges.
Rep. Ro Khanna (D-CA) and his wife, Ritu Khanna. Paul Morigi/WireImage via Getty Images
Frankel, one of Congress’ more active stock traders over the years, sold between $1,000 to $15,000 on March 16, when the stock price was $34.27.
Less than a week later, according to congressional financial disclosures, Frankel purchased up to $15,000 worth of shares in JPMorgan Chase, the bank that would go on to buy First Republic several weeks later.
“My account is managed independently by a money manager who buys and sells stocks at his discretion,” Frankel told Raw Story through a spokesperson.
Goldman spokesperson Simone Kanter similarly indicated that the freshman congressman, who has also established himself as one of Congress’ most frequent stock traders, had no personal involvement in the decision to sell between $1,001 and $15,000 worth of his First Republic shares. Goldman’s trades are executed by a financial adviser whose name his office declined to release.
“Congressman Goldman does not know why the stock was sold since he has had no contact with his advisor about specific trades since he entered Congress,” said Kanter, noting that Goldman has initiated a process to place his stock assets into what’s known as a qualified blind trust — a congressionally approved financial vehicle where a member of Congress formally cedes control of his or her assets to an independent money manager.
RELATED ARTICLE: A Democratic congressman who says Congress shouldn’t trade stock violated existing stock trade law
Blumenauer reported the sale of $1,001 to $15,000 in First Republic Bank stock on March 20 as a part of his spouse’s retirement portfolio, according to congressional stock disclosures.
“Congressman Blumenauer and his wife, a long-time successful attorney in Portland, have separate financial accounts. They have both retained a money manager with the power of attorney who makes financial decisions without their input or knowledge,” Hillary Barbour, Blumenauer’s communications director, said in a statement.
“For the Congressman’s spouse, the money manager occasionally engages in non-directed trades, meaning that she neither directs, approves, nor has knowledge beforehand of transactions made on her behalf. Congressman Blumenauer owns no individual stocks and has instructed the money manager to not purchase any stock on his behalf,” Barbour said.
Curtis purchased $1,001 to $15,000 worth of First Republic Bank shares on December 20 and sold stock in that same range on March 16, according to congressional disclosures. Curtis’s office did not respond to Raw Story’s requests for comment.
Push to ban congressional stock trading
During the 117th Congress from 2021 to 2022, at least 78 members of Congress — dozens of Democrats and Republicans alike — were found to have violated the STOCK Act's disclosure provisions, according to a tally maintained by Insider.
This year, Raw Story has identified three additional lawmakers — Sen. Tom Carper (D-DE) and Reps. Seth Moulton (D-MA) and Gerry Connolly (D-VA) — who were late disclosing personal stock trades.
Meanwhile, news organizations including the New York Times, Insider, NPR and Sludge have documented rampant financial conflicts of interests among dozens of members of Congress, such as those who bought and sold defense contractor stock while occupying positions on congressional armed services committees or otherwise voting on measures to send such companies billions of federal dollars. The executive and judicial branches are riddled with similar financial conflict issues, too, as the Wall Street Journal has reported.
A plan to enact a congressional stock-trade ban failed during the 2021-2022 congressional session after Democratic House leaders declined to bring any of several existing bills — including one floated by House leaders themselves — up for a vote.
But this year, a bipartisan group of lawmakers, including Rep. Abigail Spanberger (D-VA), Rep. Chip Roy (R-TX), Sen. Josh Hawley (R-MO) and Sen. Jeff Merkley (D-OR), have introduced several similar stock-ban bills in a renewed push to prohibit federal lawmakers and their spouses from trading stocks altogether. Cryptocurrency trades are also a target.
Rep. Chip Roy (R-TX) is among a growing group of lawmakers, both on the right and left, who want to ban members of Congress from trading stocks.
One of these lawmakers says her colleagues’ First Republic Bank trades are additional proof that members of Congress must prohibit themselves from playing the market.
“In the past few weeks, we’ve seen consistent reports of lawmakers — on both sides of the aisle — making suspiciously timed trades in the days surrounding the collapse of Silicon Valley Bank and First Republic Bank,” Rep. Abigail Spanberger (D-VA), lead sponsor of a bill that would ban members of Congress and their immediate family members from trading stocks, told Raw Story.
“These trades further erode the trust that the American people have in their elected officials, and they reinforce the importance of banning members of Congress — and their spouses — from trading individual stocks,” Spanberger said. “Rather than moving on to the next news cycle, Congress needs to meet this moment with urgency, action, and a willingness to make clear that lawmakers should be serving the people, not their own stock portfolios.”