Christiane: Now turning to the United States, where congressional insider trading, using information that is in public for financial gain, was outlawed in 2012.

That law did not stop members of Congress from buying and selling shares of companies affected by the legislation they write.

That could be set to change.

Wall Street Journal Pulitzer Prize winning journalist Rebecca Ballhaus has been investigating this and she discusses this with Hari Sreenivasan.

Hari: Rebecca, I know you are part of the Wall Street Journal's second Pulitzer Prize, or this is your second Pulitzer Prize for uncovering great reporting on financial conflict of interest.

Let's focus more on your recent reporting on how members of Congress or people in government have been trading stocks during this banking crisis we seeing.

Rebecca: Three lawmakers traded bank stocks while also taking part to varying degrees in discussions over how to handle the banking crisis.

Since we published that story, I think the count is now at least a dozen or so lawmakers who have reported trades in bank stocks.

It ranges from lawmakers who don't seem to have been that involved in the response to lawmakers who were in private discussions with financial regulators surrounding the closure of various banks and trading bank stocks at the same time.

Hari: These kinds of conversations, and we don't have transcripts of exactly what was said between one person or another, is it the appearance of impropriety that is the problem?

Hari: At best it is -- Rebecca: At best it is the appearance of impropriety.

There is a Congresswoman from New York who reported -- she publicly said she had private discussions with financial regulators surrounding the closure of signature bank.

A couple of days later she reports buying stock in New York Community Bank core.

A few days after that, a subsidiary of New York Community Bank Corps takes over the deposits of Signature Bank and sent the stock soaring.

Her office says she was not aware of that, that they did not come up in the discussions with regulators but it is an issue where you sort of have to take people's word for it that it is not something worse than an appearance problem.

Hari: This is a bipartisan problem.

You also focused on a representative from Oregon.

Rebecca: He traded I think three bank stocks when he was part of a bill that would tighten regulations.

Hari: Did the representatives in your recent pieces reach out to clarify what their positions were?

Rebecca: The first representative, her office said she was not aware that New York Community Bank Corp. planned to take over signature bank and it had not come up in conversations with financial regulators.

Essentially saying she was not trading on inside information.

Beyond that, I think the other representative offices denied any wrongdoing and set a financial advisor was involved.

There are a lot of ways to sort of defend the lawmakers but I think what it comes down to is how it looks when you reading these disclosures.

Hari: There are a lot of reports around the pandemic.

As we lived through, there was a massive market correction, a precipitous drop in a lot of stocks.

If you knew what sorts of stocks were going to be affected by, say, a nationwide shutdown, could have sold those early and quite a few members were found that had very coincidentally profitable trades.

Rebecca: I think that was among the more scandalous moments of this kind of trading the last several years, when it emerged several members of Congress had sold off millions of dollars worth of stocks.

One example was Richard Burr, who sold I think over $1 million of stock after attending a closed-door briefing on the threat of the virus.

He ended up being investigated by DOJ and the SEC but was ultimately cleared of wrongdoing.

That was Senator Burr, a Republican, but you also had Dianne Feinstein, similarly selling off a lot of her portfolio.

It's not concentrated in one party or the other.

Hari: If this was non-numbers of Congress and the SEC or any other body looking into these kind of things, would we be investigated for insider trading or having insider knowledge and making a trade that was coincidentally very profitable for us?

Rebecca: That's always hard to say.

Congress is not allowed to insider trade, much like everybody else.

I think it is an area where there have been so many scandals that they have stopped getting the same intense scrutiny they might have once gotten.

I think people have gotten more used to this behavior.

Hari: What is Congress's response to this?

I know there are individual members in the Senate and House trying to do something about it.

Rebecca: What is interesting is there are Sony members of both parties who have proposed bans on stock trading outright.

There are differences in the kind of proposals introduced.

Most of the differences deal with what kind of blind trust lawmakers could put holdings and.

For the most part, several members of both parties support banning members of Congress from trading and holding individual stocks and would require them to put their investments in some kind of a trust.

That would help this issue because right now there are no rules other than the ban on insider trading.

There are no rules that require lawmakers not to trade in stocks that could be affected by the work or areas where they have private knowledge of what is coming.

Congress is in a unique addition to have a sense of what is coming for a particular industry or company.

Congress is unique, at least compared to the executive branch, and that it faces no rules that determine whether they can trade in something they are working on.

Hari: If there is some bipartisan agreement that some think should be done about this, what is the resistance in Congress?

Is there a rationale or argument about why legislation like this is not going forward?

Rebecca: That's a good question.

I think there are couple of issues.

The argument against having a band like this is number one, people argue it would deter lawmakers from running for Congress if they feel like they have to sell their stocks or put them in a trust and otherwise cannot trade.

The other argument is if members of Congress are not able to trade stocks, it would in some ways divorced them from the economic interests of their constituents.

Those are some of the arguments put the word.

But I think on that, it is an issue of coming to an agreement on what it should look like.

This past fall, House Democrats introduced a proposal that would ban stock trading, require lawmakers to put their holdings in a blind trust, but that proposal drew a lot of criticism from some FX groups that said the rules for creating a blind trust were so weak it would make the current system worse.

I think some of the disagreement centers on what should these trusts look like?

Hari: There's been this philosophy a while that light is the best disinfectant and if I just disclose I purchased some shares, that transparency is enough in itself to avoid the conflict of interest or the appearance of a conflict of interest.

But the way that is reported, of when you bought a share and when you have to tell the public -- there is still a lag.

Rebecca: Right.

Congress is also of the three branches of government where disclosures are historically easiest to get because they are posted online.

But there is a delay.

I think more and portly, it had so many different scandals related to lawmakers trading stocks and nothing has really happened that I think the argument has a sort of become diluted because if members of Congress know they are very likely not going to face any consequences for trading in a stock that might look bad but not necessarily be insider trading, there's not really a disincentive for them to make those kinds of trades.

Hari: You've also been looking into not just members of Congress but other branches as well.

We are seeing both in judicial as well as executive branch, people and caught up in this and it being revealed after the fact that they might have had trades that were unduly profitable.

Rebecca: I spent most of last year looking at the executive branch of government.

That was a really interesting case because unlike Congress, federal agency employees have rules that say they are not supposed to trade in stocks of companies that could be affected by what they are working on.

When we first set out we expected we would not necessarily find that much because the rules are so much strict than for Congress.

But what we found showed there was a lot of questionable trading.

For starters, the disclosures that are supposed to be public that you are supposed to be able to review, were incredibly difficult to get.

We started requesting the forms for more than 50 agencies in January of last year and we still have not received the disclosures from some agencies.

More importantly, I think these disclosures showed there is rampant trading in stocks affected by the work of agencies and the FX officials are narrowly interpreting these rules, saying you have to be the deciding voice on an issue that would affect the company in order for it to count as a conflict.

Hari: Your investigation and capital assets looked at 2500 employees across 50 different federal agencies.

Were there any specific agencies or groups where it was particularly egregious?

Rebecca: There were a couple that really stood out.

One story we did early on was on the FTC, where he found a number of officials trading stocks and companies involved in mergers or other reviews by the FTC.

We also found officials were trading stock and major tech companies that have received a lot of scrutiny in recent years.

Many trades in Facebook in particular at the time when the FTC was investigating Facebook.

Beyond that, I think the EPA had a lot of trades in energy and oil and gas companies that would be affected by the agencies.

The same is true by the Energy Department.

Like with Congress, we also found instances of officials trading in the early days of the COVID pandemic in ways that appeared to be quite well-timed given what they might have known about what was coming.

Hari: In your investigation, just reading a quote from you about the FTC, the Federal Trade Commission in recent years have opened investigations into almost every major industry, it has launched antitrust probes, investigator credit card firms and moved to restrict mergers.

At the same time, senior officials of the FTC disclosed more trades of stocks, bonds and funds on average than officials of any other major agency in a review going back from 2016 through 2021.

How did they take up a special interest in tech companies and what did that due to their influence?

Rebecca: I think what was clear from that was that the rules were not being enforced in such a way that there was any disincentive to be trading in tech companies.

What FX officials were looking for work officials taking a leading role in a matter that could affect the company and they were not looking at this broader pattern of how all of these officials trading tech companies while we are supposed to be the agency making sure we are keeping a tight check on the tech industry.

It wasn't really that holistic of a view.

It was much more narrowly targeted on what exactly is this person doing and what exactly are they treating?

Hari: You mentioned the EPA as well and you found 200 senior EPA officials, nearly one and three, reported investments in companies that were lobbying the agency.

What do these investments look like?

Rebecca: One of the officials we highlighted in our story was a senior official trading repeatedly and oil and gas and energy companies and an ethics official flagged his trades and asked whether there was a conflict and the answer they got was that his role was much more administrative in nature and he was not determining the outcome of various regulations and therefore it wasn't a problem.

I think that is an example of a kind of narrow view some FX officials across the government are taking, looking at specifically, do we think they are working on the thing that could have a major outcome and not just look bad.

Hari: There is Nick Lang in New York I think, said he would introduce legislation to try and put better parameters around federal agencies could would that improve things?

Rebecca: I think like with the bans on congressional trading, a number of members have introduced legislative that would either ban trading or require agencies to impose tough restrictions.

I think a mixture of that would certainly improve the situation.

I think as it is you have this idea that sunlight is the greatest disinfectant but you are not really able to view most of these forms in real time.

When you do view them, you can see so much trading in the industry that the industry is supposed to be regulating.

Hari: Nancy Pelosi has famously been criticized for trades her husband has made an interestingly strange group of bedfellows in cosponsoring a piece of legislation to try to prevent lawmakers and families from profiting off of insider information.

Do you see that gaining any momentum, any meaningful momentum in trying to restore faith in government?

Rebecca: I think anytime you have such an unusual mixture of lawmakers, on the Senate side, you have Josh Hawley to Elizabeth Warren.

When you see those people banding together over an issue, I am more inclined to say it will get some momentum to I think for the executive branch in particular, some members of Congress feel it is important to address their own issues before they move on to the rest of the federal government.

You've seen some proposals that would restrict trading in both Congress and the judicial and executive branches, see them all three at once, and others say we need to do with Congress and then we can move on to everything else.

That is one hurdle we are seeing so far.

Hari: I know it's hard to measure our confidence in Congress and exactly what it is that shapes it, but I wonder, the type of reporting you, your team, the times and other papers, so many scandals have come into play and I wonder what that does to our faith and lawmakers in the system.

Rebecca: I think it's a really important question, because what we heard over and over from readers in response to our series last year was basically I knew it.

It's not necessarily shocking to readers but instead confirming a lot of what them already believed or feared, which is that lawmakers are out for their own private interests rather than the interests of the country.

I think if seen broad support for bans on stock trading in Congress.

I think it really is an issue that seems to be contributing sort of to the eroding public trust.

Hari: Rebecca, thank you so much.