Lawmakers Made Massive Stock Trades Amid Failure Of Multiple Banks

Last month, as multiple financial institutions collapsed, several lawmakers made significant trades in bank stocks, according to federal disclosures.

Due to the failure of Silicon Valley Bank and Signature Bank, which backed the Federal Deposit Insurance Corporation’s $250,000 threshold for account balances, the government-backed company secured the firms’ accounts in order to prevent additional bank runs. First Citizens Bank and New York Community Bancorp respectively acquired the assets of the two firms at substantial discounts.

Rep. Nicole Malliotakis (R-NY) purchased between $1,001 and $15,000 of New York Community Bancorp stock on March 17, after officials had discussed the failure of Signature Bank, as shown in her periodic transaction report. The stock increased from $6.54 on March 17 to $9.19 on March 21, two days after the acquisition’s announcement, and currently sits at $9.04. The Wall Street Journal was told by a spokesperson for Malliotakis that she traded on the advice of her financial advisor, and was not aware that New York Community Bancorp would acquire Signature Bank. The lawmaker claimed in the report that her spouse had purchased the shares, even though she is not married; the spokesperson said the designation was a mistake, and Malliotakis will rectify the form.

In contrast, Rep. Earl Blumenauer’s (D-OR) wife purchased between $1,001 and $15,000 of Silicon Valley Bank stock and sold as much as $15,000 of Bank of America stock on March 9. She also sold as much as $15,000 of First Republic Bank stock on March 20, according to his periodic transaction report. Silicon Valley Bank stock fell from $106.04 on March 9 to $0.57 as of Tuesday, resulting in significant losses for Blumenauer. Bank of America stock, on the other hand, fell from $30.54 on March 9 to $28.53 as of Tuesday, saving the lawmaker from losses, while First Republic Bank stock rose from $12.18 on March 20 to $14.22 as of Tuesday. Blumenauer’s spokesperson claimed that he was unaware of his wife’s trades.

Rep. John Curtis (R-UT) sold as much as $15,000 of First Republic Bank stock on March 16 and a partial sale of between $1,001 and $15,000 of Bank of America stock on the same day, according to his periodic transaction report. As share prices for First Republic Bank declined from $34.27 on March 16 to $14.25 as of Tuesday, Curtis avoided losses, whereas share prices for Bank of America remained mostly unchanged.

Malliotakis and Blumenauer are members of the House Ways and Means Committee, whilst Curtis sits on the House Energy and Commerce Committee.

Several prominent lawmakers, including former House Speaker Nancy Pelosi (D-CA), have recently been accused of leveraging their knowledge of upcoming regulations or economic upheaval to purchase stocks at opportune times and minimize losses by selling shares. The New York Times conducted an analysis last year, revealing that as many as 97 lawmakers or their immediate family members purchased or sold assets related to their legislative committee work between 2019 and 2021.

Since then, various legislative proposals have advocated for a ban on individual stock trading by lawmakers and their relatives. Earlier this year, Senator Josh Hawley (R-MO) proposed the Preventing Elected Leaders from Owning Securities and Investments Act, also known as the PELOSI Act. Last month, Rep. Pramila Jayapal (D-WA), Rep. Matt Rosendale (R-MT), and Rep. Ken Buck (R-CO) introduced a similar bill that would impose significant fines on lawmakers if they were caught trading individual stocks.