New Ethics Bill Forces Congress to Dump Stocks: Families Get 90-180 Days to Sell 'Covered Investments'

The “Restore Trust in Congress Act” is aiming to do exactly what it says on the tin: hit the reset button on government ethics by banning Members of Congress, their spouses, and their dependent children from owning or trading individual stocks, commodities, or complex financial products while in office.

This isn't a suggestion; it’s a mandate. The bill creates a new category called “covered investments” and says if you’re a “covered individual”—meaning a Member of Congress or their immediate family—you can’t touch them. The good news for your 401(k) is that widely held, diversified mutual funds, U.S. Treasury bonds, and state/local bonds are explicitly excluded from this ban. If you’re already in office when the law passes, you get 180 days to sell off your restricted assets. If you come into office later, you get a tight 90 days. To ease the pain of a mandatory, quick sale, the bill allows those divesting to use special tax relief under Section 1043 of the Internal Revenue Code, which is usually reserved for avoiding conflicts of interest. Basically, the government is saying, 'We’re making you sell, so we’ll help you out on the tax bill.'

The Fine Print on Family Finances

This bill goes deep into the family's finances, which is where things get complicated for the average person whose spouse happens to work on Capitol Hill. If a Member’s spouse or dependent child has a covered investment, they must also sell it. There are a few key carve-outs: the ban doesn't apply if the trade is part of the spouse’s or child’s primary job. For example, if a Member’s spouse is a financial analyst and trades as part of their employment, that’s allowed, provided the Member doesn’t own the investment themselves. The bill also protects small business interests and investments related to a personal residence, recognizing that people need to maintain their careers and homes.

Trusts are another sticky point. If assets are held in a "qualified blind trust," they still have to be divested. However, there’s an exception for family trusts that the covered individual didn't create or fund, and where they have zero power over the trustee. This is a critical detail because it could be a potential loophole if the definition of "family member" who created the trust is interpreted broadly. For the average person, this part means the law is trying to prevent officials from hiding their assets behind complex legal structures while still allowing for legitimate family inheritance vehicles.

No More Slap on the Wrist: The Cost of Cheating

If a covered individual breaks these new rules, the supervising ethics office has the power to hit them with serious financial penalties. The fine is ten percent (10%) of the investment’s value, plus they must forfeit any profits made from the illegal transaction. All that penalty money goes straight into the U.S. Treasury, not back to a political fund or a special account. Furthermore, Members of the House are specifically barred from using campaign funds or their official office budgets (the Members Representational Allowance) to pay these fines. This is a clear move to ensure the penalty comes directly out of the individual’s pocket, and every single fine assessed must be publicly posted online by the ethics office, detailing the violation and the outcome. This transparency is a big deal for accountability, letting the public see exactly who is following the rules and who isn't.