Here Comes the Judge, Wall Street Right Behind

DC Politics Financial Justice Ideas and Issues


Marble Falls      Finally!  Who says that the US Congress can’t agree on anything?  The Senate has now unanimously passed legislation that members of the Supreme Court and all federal judges will have post their stock trades and financial holdings in real time.  Notice, I said unanimously.  In December, the House of Representatives had passed a related measure by 422-4, which is a healthy margin as well.  Now it goes to conference for some patchwork, sanding, and polish before the president signs it into law.  Meanwhile, undoubtedly, phone lines are burning in judges’ quarters in courtrooms in federal buildings across the country as judges call their brokers and try to get right and get it done before the law is finalized.

You’re thinking, hey, this doesn’t prove those folks can get anything done.  This was a no-brainer!  Any fool would know that judges can’t rule on a case in front of them when they own stock in the companies or trade on information that is being presented to them in a hearing in their courtroom.

Well, you would be wrong.  Investigations by the Wall Street Journal found that 110 federal judges had done just that either in their own name or spouses.  All of this had been in the face of judicial ethics rules that were clear that this was a no-no, as obvious as the nose on their faces.  The problem with rules, as all of the judges knew since this was their stock in trade, is that rules mean nothing without enforcement, and if no one is looking, party on.

Just to be clear, US Supreme Court Chief Justice John Roberts in his annual report on the state of the nation’s judiciary had been clear that he didn’t want to see this law.  As the head of an independent branch of government, he felt Congress should mind their own business, and he and the brothers and sisters of the robe would deal with this in their own way.

He was wrong of course, but he had a point.  Cynically, I suspect one of the reasons for the lopsided bipartisan vote in both houses of Congress is that these elected officials are probably happy to point the fingers at the black robes to keep eyes off of their own inability to police insider trading.  A number of Senators, both sitting and now gone, made money on early warnings about the impact that Covid would have on the economy and dumped some stocks and bought pharmaceuticals, as if they were in a candy store without hesitation.  This wasn’t the first time, just the latest example. There was some hand slapping, but nothing really serious.  In fact, they are reportedly still fighting about what to do about all of this since “the optics”, as they term ethical breaches, are bad in the eyes of our much poorer citizens.  Some of the younger, Congressional newbies are pushing for this, but reportedly even Speaker of the House Nancy Pelosi is not helpful, because she’s not happy disclosing the trading done by her husband.

There needs to be a bright line on all of these shenanigans from top to bottom at all levels of government, and it needs to be enforced. The problem is that when Wall Street is calling, too few know how to say, no, partly because too many are already listening for the siren call of the market to pad their pockets even before they pick up the phone.