Treasury Secretary Scott Bessent has renewed his demands for Congress to end stock trading, emphasizing the clearly excessive returns for legislators.
In 2024, Senate Finance Committee Chairman Ron Wyden's portfolio rose by 123.8%, while the S&P 500 returned 24.9%, and at the same time, Speaker Nancy Pelosi's portfolio produced 70.9%.
Bessent urges to stop congressional trading as House leaders receive excessively high returns.
Scott Bessentin warning comes when asset managers increase their stock positions in the United States stock market to record levels. S&P 500 futures net long positions are now 49%, close to historical highs.
Analysts note that the combination of an extremely market position and increasing political scrutiny raises questions about timing.
EndGame Macro, a well-known analyst, estimates that regulation often considers insider and political trading only towards the end of a bull market, particularly when general frustration and valuations are high.
"When rules tighten for those closest to the information, it is often because most of the benefits have already been captured," the analyst noted.
Studies highlight the extent of the overwhelming success of members of Congress. In a working paper by the National Bureau of Economic Research, Shang-Jin Wei and Yifan Zhou note that congressional leaders outperform their peers by about 47% annually after moving into leadership roles.
The analysis identified two main factors:
Direct political influence
This includes, for example, trading before regulatory actions or investing in companies expected to receive government contracts, as well as
Access to non-public information
Concerns the home state or donor companies, meaning information that the average investor does not have.
Historical examples illustrate this advantage.
Pelosi is reported to have achieved cumulative returns of 854% since the 2012 STOCK Act; the comparable figure for the S&P 500 was 263%.
Wyden reportedly achieved returns of 123.8% as chair of the Senate Finance Committee in 2024, and in 2023 the return was 78.5%, while the S&P 500's return was only 24.8%.
These figures exceed the returns of many professional hedge funds and highlight significant information-related imbalances as well as concerns about market fairness.
Bessent's absence from the discussion frames the issue as a credibility problem for Congress, not a partisan dispute.
"When congressional leaders achieve returns that exceed many of the world's most successful hedge funds, it undermines the credibility of Congress as a whole," she stated in her publication.
There is broad public support for banning congressional trading. In a 2024 YouGov poll, 77% of Republicans, 73% of Democrats, and 71% of Independents supported the ban.
Legislative proposals, such as the Restore Trust in Congress Act, would require legislators and their families to divest from individual stocks within 180 days. The ability to invest in funds and ETF products would remain.
However, congressional leaders have not timed the vote, and by December 2024, of the 218 names required, only 23 had been gathered to initiate the process.
Members of Congress are divided in opinion; some warn that restrictions will drive away qualified candidates, while others view the reform as 'the voice of reason' and necessary for good governance.
The record bull market position signals a maturing cycle.
The discussion of congressional stock trading relates to a broader strong bullish sentiment in the stock market. The Kobeissi Letter reports that net long positions in S&P 500 futures grew by 49%, or about 400% since 2022.
The figure is nearly double the long-term average and more than two standard deviations away from historical averages.
Also, Nasdaq 100 futures are high, and the S&P 500 achieved 37 new records in 2025, the third most since 2020.
Although the development has been strong, Bank of America (BofA) remains cautious about the outlook. According to the bank's forecast, the S&P 500 will rise to 7,100 points by the end of 2026, which is only 4% higher than the current high. BofA cites AI-related valuation pressures and potential slowdowns in tech consumption as reasons for caution.
According to analysts, extreme positioning combined with potential regulatory actions indicates market maturity rather than the beginning of a new growth phase. The timing of reforms may suggest that insiders have already significantly benefited from the rise.
Record high inflows and increasing regulatory oversight act as a barometer for market cycles, rather than a direct warning of a crash. It serves as a reminder that late-cycle dynamics drive both equity and risk markets, including cryptocurrency markets.
