Lifetime Lobbying Ban and Full Salary Penalty: New Ethics Bill Forces Officials to Sell Off Stocks in 90 Days

The aptly named Restoring Trust in Public Servants Act is exactly what it sounds like: a major overhaul of the financial rules for nearly everyone working high up in the federal government. If you’ve ever wondered why politicians seem to know exactly when to buy or sell certain stocks, this bill aims to shut down that entire opportunity structure. It is a tough, no-nonsense piece of legislation that essentially forces thousands of federal officials and their families to liquidate most of their investment portfolios, backed by penalties that are genuinely severe.

The Great Divestment: Selling Off Your Stock Portfolio in 90 Days

Section 2 is the big one, targeting covered investments. Think of this as a ban on owning individual stocks, commodities, or even crypto assets if you are a "covered official." This includes Members of Congress, high-level political appointees across the Executive Branch, and even federal judges. The ban also extends to the spouses and dependent children of Members of Congress.

What’s out? Individual stocks, specific commodities, and digital assets. What’s in? Diversified mutual funds, diversified ETFs, and U.S. Treasury bonds are explicitly excluded from the ban. The goal here is simple: Officials can still invest, but only in broad, diversified funds where their decisions won't be perceived as, or actually be, based on insider information. If an official or their family member currently owns a covered investment, they have a strict 90-day window from the law's enactment to sell it off.

The Price of a Violation: Your Entire Monthly Paycheck

This is where the bill gets real. If a supervising ethics office finds a violation of the ownership rules, the penalties are designed to sting. For high-level officials—Members of Congress, the President, VP, and Senate-confirmed appointees—the penalty is the forfeiture of their entire salary for that month. This isn't a slap on the wrist or a small fine; it's a massive financial deterrent. Even if they violate the rule concerning multiple stocks in that month, it’s still one penalty per month, but the message is clear: compliance is non-negotiable.

To ease the pain of this mandatory sell-off, the bill offers a sweetener: officials who divest their covered investments to comply can get special tax treatment, allowing them to defer capital gains taxes on those sales. It’s a mechanism designed to ensure that officials don't hesitate to sell because of a huge tax bill, making it easier to meet that 90-day deadline.

Congress: Out of the Boardroom, Off the Lecture Circuit

Section 3 takes aim at the side hustle. For Members of Congress, this bill effectively institutes a near-total ban on outside earned income. Previously, they had a cap allowing outside earnings up to 15% of their salary. While the bill’s language is slightly confusing—it re-states the 15% limit while also banning outside income—the intent is clearly to severely restrict how Members can earn money outside of their Congressional paycheck.

They can still be paid for practicing medicine (if they have a fiduciary relationship) or for teaching, provided they give prior notice. But serving on corporate boards, getting paid for speeches, or consulting? That’s mostly out. This means Members must choose between public service and lucrative side gigs, making the job a full-time commitment.

The Lifetime Lobbying Ban

Finally, Section 4 addresses the revolving door, and it slams it shut for former Members of Congress. Under the new rules, if you were a Senator or Representative, you face a lifetime ban on lobbying high-ranking officials in the Executive Branch or anyone in either House of Congress. This also extends to lobbying on behalf of foreign entities. If you leave Congress, you can’t immediately cash in on your contacts and knowledge by lobbying your former colleagues or the agencies you used to oversee.

This is a massive change. The old rules often involved a one- or two-year cooling-off period. A lifetime ban fundamentally alters the financial calculations of leaving public service, potentially making the job less attractive to those who saw it as a stepping stone to a highly paid lobbying career. This change applies to anyone who leaves office after the start of the 120th Congress or January 4, 2027, whichever comes first. It’s a clear signal that the days of the immediate, lucrative lobbying pivot for former lawmakers might be over.