Why are Minnesota congressional members being called out for potential conflicts of interest?

The U.S. Capitol building.
A general view of the U.S. Capitol Building on May 14, in Washington, D.C.
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The New York Times this week reported that three Minnesota members of Congress had potential conflicts over their trading of stocks, bonds and other financial assets.

U.S. Reps. Dean Phillips and Angie Craig and Sen. Tina Smith, all Democrats, reported trading stocks for themselves or family members in companies that could be affected by their legislative work.

The Minnesotans are among 97 current United States legislators listed in the report. To explain this ethical issue, Host Cathy Wurzer spoke with Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota’s Humphrey School of Public Affairs.

Why is this an issue?

Well, obviously, if you've got members of Congress sitting on committees, taking votes, making decisions that could impact their holdings, that would be a big issue. So for instance, we've got a senator who is involved in cattle and he's involved on the Ag Committee.

He is making policy on the committee that affects the price of cattle when they're sold. And that is just rampant throughout Congress, this sort of potential conflict of interest between the work of members … and their financial holdings or that of their families.

But members of Congress are allowed to buy and sell stocks and bonds and other financial instruments as long as they don't trade on the inside information in terms of the Stock Act. Is that right?

That is exactly right. That's the sticking question, though. Do they have access to information even if you know that information is not necessarily on their committee or the hearing from colleagues?

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If you've got a member of Congress whose committee that they sit on is making decisions or issuing damning reports about an industry that they hold stock or a member of their family does, it looks terrible. It could be terrible.

It could be corruption, so that's the problem. And, you know, I think the more you go into the details, the more difficult some of these conclusions become.

Dean Phillips is the most involved in these trades, how much of a problem is that for him?

Well, it looks terrible. The impression is bad. On the other hand, it really helps to know that he put all of his financial holdings with a law firm that is making his financial decisions. So it's a blind trust. He does not have access to information that he can then turn around and use it.

So to me that is a case that we're protected against an actual conflict of interest. But the potential, you know, and the public perception of it is quite damning.

Should we require that all members of Congress put their assets into blind trusts?

This has been an ongoing issue in Congress and in both parties. This is not just Democrats, if you look on the Republican side, plenty of Republicans, including the Senate leader Mitch McConnell, have been listed in this Times report.

But the problem in the past is that members of Congress are saying “Wait a second, I'm not taking a vow of poverty. And I need to be able to be engaged with my financial holdings and we're going to take protections to avoid any impropriety or the perception of it.”

Obviously, that doesn't work, though. And I I understand why people might be outraged by what's happened with the three Democrats listed but dozens of Republicans are also listed.

So legislators, they will they will not face any consequences for this?

Well, I think there needs to be a close look. But I would say based so far on what we know about the three Minnesotans, I don't see grounds for it. But again, we're just maybe at the early stages of this.

Angie Craig is listed and the financial transactions were by her college age son. And she says she had no idea that was going on. She actually favors this tougher legislation that would bar all members of Congress and their families from having the perception that they're trading on insider information.

Correction (Sept. 15, 2022): An earlier version of this story misstated Larry Jacobs' position with the University of Minnesota.

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Audio transcript

[MUSIC PLAYING] CATHY WURZER: A report from the New York Times shows that three Minnesota members of congress had conflicts with trading stocks, bonds, and other financial assets that intersected with their congressional work. US Democratic representatives Dean Phillips and Angie Craig as well as senator Tina Smith all reported trading stocks for themselves or family members in companies that could be affected by their legislative work. The Minnesotans are among 97 current US legislators listed in the report.

To explain this ethical issue, we're joined by professor Larry Jacobs. He is chair of public affairs and political studies at the university of Minnesota's Humphrey School of Public Policy. Professor Jacobs, welcome back. How are you?

LARRY JACOBS: Good. Good to be with you, Cathy.

CATHY WURZER: Thank you for joining us. Let's start with the basics of the story. The Times did this extensive analysis of stock trades by members of congress from 2019 to 2021. And over that three-year period, more than 3,700 trades reported by lawmakers from both parties. Why is that an issue?

LARRY JACOBS: Well, obviously, if you've got members of congress sitting on committees, taking votes, making decisions that could impact their holdings, that would be a big issue. So for instance, we've got a senator who is involved in cattle raising and he's involved on the AG committee and making policy on the committee that makes policy that affects the price of cattle when they're sold. And that is just rampant throughout congress. The potential conflict of interest between the work of members of congress in committees and their financial holdings or that of their families.

CATHY WURZER: But members of congress are allowed to buy and sell stocks and bonds on their financial instruments as long as they don't trade on that inside information their terms of the STOCK Act, is that right?

LARRY JACOBS: That is exactly right. That's the sticking question, though, which is, do we-- or do they have access to information even if that information is not necessarily on their committee? Are they hearing it from colleagues? We've got-- in our case in Minnesota, we've got one of the members, Dean Phillips--

CATHY WURZER: You still with me, Larry? Oh, my goodness! We appear to have lost Larry Jacobs. We just had a dropped cell there. That's always difficult when you're doing something live on the radio.

We are talking, by the way, about this New York Times report that showed that 97 sitting members of congress, including three members of the Minnesota congressional delegation were trading stocks and bonds and other financial assets that intersected-- could intersect with their congressional work.

And Larry Jacobs, who's from the university of Minnesota, was talking about the ethics of that. And then, of course, we just happened to lose him. So I'm hoping we get him back somewhere along the line. If not, of course, we'll have to move on to other news of the day. Larry, are you with us? Evidently not. We'll continue to work on this situation.

LARRY JACOBS: I can hear you.

CATHY WURZER: Hi there, Professor Jacobs. Sorry about that. We have some gremlins in our system.

LARRY JACOBS: Yes. Well, they're out there.

CATHY WURZER: It happens. At any rate, we were talking a little bit about the STOCK Act, why this could be a potential problem. This is allowed under congressional rules. But as you know, perception is everything in politics. So is there a perception of impropriety? And what does that do for public confidence and lawmakers, which really isn't terribly high?

LARRY JACOBS: Exactly. If you've got a member of congress whose committee that they sit on is making decisions or issuing damning reports about a industry that they hold stock in or a member of their family does, it looks terrible and it could be terrible. It could be corruption. So that's the problem. And I think the more you go into the details, the more difficult some of these conclusions become.

CATHY WURZER: Now, you were talking about congress member Dean Phillips, one of the Minnesotans involved, at least mentioned in this New York Times article. He seems to have had by far the most stock trades of the three Minnesotans. How much of a problem is that for him?

LARRY JACOBS: Well, it looks terrible. So the impression is bad. On the other hand, it really helps to know that he put all of his financial holdings with the law firm that is making his financial decisions. So it's a blind trust. He does not have access to the information that he can then turn around and use. So to me, that is the case that we're protected against the actual conflict of interest, but the potential and the public perception of it is quite damning.

CATHY WURZER: Have there been calls in the past to tighten up the rules and to maybe require that all members of congress put their assets into blind trusts?

LARRY JACOBS: Yes, this has been an ongoing issue in congress and both parties. This is not just Democrats there. If you look on the Republican side, there are plenty of Republicans, including the senate leader, Mitch McConnell, who's been listed in this Times report.

But the problem in the past reform is that members of congress are saying, Wait a second. I'm not taking a vow of poverty. And I need to be able to be engaged with my financial holdings. And that we're going to take protections to avoid any impropriety or the perception of it. Obviously, that doesn't work though.

And I understand why people might be outraged by what's happened with the Democrats in Minnesota, the three Democrats listed by the Times and the dozens of Republicans who are also listed.

CATHY WURZER: So legislators, they will not face any consequences for this?

LARRY JACOBS: Well, I think there needs to be a close look. But I would say based so far on what we know about the three Minnesotans, I don't see grounds for it. But again, we're just maybe at the early stages of this.

Tina-- excuse me Angie Craig is listed, and the financial transactions were by her college age son. And she says, I had no idea that was going on. She actually favors this tougher legislation that would bar all members of congress and their families from having the perception that they're trading on insider information.

CATHY WURZER: By the way, is this-- is the STOCK Act-- is that a fairly recent bit of legislation? Has this gone on for decades?

LARRY JACOBS: The conversation has gone on for decades. The Act is more recent.

CATHY WURZER: Larry, I'm sorry, I have to run. I appreciate your time. Thank you so much. And I'm sorry about the technical issues.

LARRY JACOBS: Always good to be with you, Cathy.

CATHY WURZER: Likewise. Of course, I've been talking to Professor Larry Jacobs. He's the chair of public affairs and political studies at the U of M's Humphrey School of Public Policy.

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