A new bipartisan bill looks to thwart financial conflicts of interest for top government officials

A new bipartisan bill aims to beef up prevention of financial conflicts of interest between senior federal government officials and the industries their agencies regulate. 

Reps. Nick Langworthy, R-N.Y., and Derek Kilmer, D-Wash., have co-sponsored the Halting Ownership of Non-Ethical Securities and Trusts (HONEST) Act, which comes after a Wall Street Journal investigation published last fall found that thousands of federal government officials reported owning or trading stocks in companies that were affected by their agencies’ actions. 

“When their personal financial interests are intertwined with the industries they regulate, it creates a conflict of interest that exploits trust in our government institutions,” Langworthy said in a statement. “The bipartisan HONEST Act will provide greater transparency and safeguard public interest by establishing clear guidelines that prioritize the American people.”

Specifically, the bill would ban senior executive branch officials from owning financial interests in corporations, businesses, partnerships or other for-profit entities that are regulated substantially by the agency where they work. “This includes any businesses, corporations, or partnerships connected to a major contractor of the agency, or an organization that has significant lobbying contacts with the agency,” a fact sheet about the bill stated. 

The bill would cover government officials who have positions at the GS-15 level or above on the General Schedule, those not on the GS scale whose basic pay rate is 120% above the minimum for a GS-15 and uniformed officials whose pay is at or above level O-7. There are “commonsense exceptions for interests held through a diversified fund or a qualified blind trust,” the fact sheet said. 

Dylan Hedtler-Gaudette, senior government affairs manager at the nonprofit Project on Government Oversight, which endorsed the bill, said, “there are rules on the books,” but due to politics and “the power imbalance,” they’re often difficult to enforce and aren’t extensive enough. The bill “takes an existing model” of prohibited holding rules at various executive agencies, and expands it to all agencies.

Also, the Journal pointed out in its reporting: “Ethics officials’ ability to spot potential conflicts is limited because they usually don’t know what employees are working on.” Also, “U.S. law leaves it to individual agencies to decide whether they need rules to beef up the federal conflict-of-interest law.”

The Bull Moose Project, a nonprofit that seeks to develop the next generation of conservative leaders and policies, and nonprofit Citizens for Responsibility and Ethics in Washington also endorsed the bill.