The Public Service Accountability Act
- Sponsor
- Rep. Goodlander, Maggie [D-NH-2]
- Committees
- Judiciary Committee (primary)
- Last action
- Jun 24, 2026
Bottom line
The Public Service Accountability Act aims to eliminate conflicts of interest by banning stock ownership and trading for a wide array of federal officials and their families, requiring divestiture of existing assets, and imposing financial penalties for non-compliance.
What it actually does
This bill prohibits Members of Congress, their spouses, dependent children, and a broad range of other federal officials (including the President, Vice President, judicial officers, and senior executive branch employees) from directly or indirectly owning or trading individual stocks, commodities, futures, or comparable synthetic economic interests. It mandates the divestiture of any existing prohibited investments within 90 to 180 days of enactment or becoming a covered individual, and offers tax deferral benefits for certain divesting officials. Violations are subject to fines and disgorgement of profits, with public disclosure.
Proponents argue
Supporters argue that this bill is a critical step to restore public trust in government by removing any appearance or reality of insider trading and conflicts of interest. They contend that public officials should focus solely on their duties without the distraction or temptation of personal financial gain from market activities, ensuring that policy decisions are made for the public good.
Opponents contend
Opponents might argue that the bill is overly broad in its scope, infringing on the personal financial freedom of thousands of federal employees and their families, potentially deterring highly qualified individuals from public service. They may also raise concerns about the administrative burden on ethics offices and the financial implications of forced divestiture for individuals with complex portfolios.
The bill is concise and relatively straightforward, allowing an informed reader to quickly grasp its core provisions and implications.
Section 1
Short Title: 'The Public Service Accountability Act'
This section formally designates the short title of the bill as 'The Public Service Accountability Act'. This allows for easy reference and identification of the legislation in public discourse and legislative processes, providing a concise name for the comprehensive ethics reforms it proposes.
Supporters argue
A clear and descriptive short title is essential for effective communication about the bill's intent and for its tracking through the legislative process, making it more accessible to the public and stakeholders.
Critics contend
No specific opposition is typically raised against the naming of a bill, as it is a standard legislative practice.
Tradeoffs
None.
Section 2(b), new 5 U.S.C. 13151(2)
Expansive Definition of 'Covered Individual'
This provision broadly defines 'covered individuals' to include not only Members of Congress, but also congressional officers and employees, their dependent children and spouses, judicial employees and officers, the President and Vice President and their dependent children and spouses, and various senior executive branch officials (including those on the Executive Schedule, Schedule C, special Government employees, and senior executives). This significantly expands the scope of individuals subject to the new investment restrictions across all three branches of the federal government.
Section 2(b), new 5 U.S.C. 13151(3)
Scope of Prohibited Investments and Key Exclusions
This section defines 'covered investment' as an investment in a security, commodity, future, or any comparable economic interest acquired through synthetic means (like derivatives). Crucially, it also lists several exclusions: widely held diversified investment funds, U.S. Treasury bills/notes/bonds, State/municipal bonds, compensation from a spouse's or dependent child's employer, interests in small business concerns, interests in LLCs for personal residences, and specific Alaska Native Claims Settlement Act stocks. These exclusions allow for certain types of passive or non-conflicting investments.
Section 2(b), new 5 U.S.C. 13152(a)
Direct Prohibition on Owning or Trading Covered Investments
This core provision directly prohibits any covered individual from, directly or indirectly, owning or trading a covered investment. It also explicitly bans entering into agreements or transactions for excluded commodities that are dependent on specific events or contingencies. This establishes the central operative ban of the bill, aiming to eliminate active financial interests that could create conflicts.
Section 2(b), new 5 U.S.C. 13152(b)
Mandated Divestiture of Existing Holdings and Timelines
This section requires all covered individuals to divest any existing covered investments at fair market value. For individuals already covered when the Act is enacted, the deadline for divestiture is 180 days. For those who become covered individuals after enactment (e.g., new appointees or elected officials), the deadline is 90 days from the date they become covered. This ensures a clear and timely transition to compliance for all affected parties.
Section 2(b), new 5 U.S.C. 13153
Penalties for Violations and Public Disclosure
This section outlines the penalties for covered individuals who violate the investment restrictions: a fine equal to 10% of the value of the non-compliant covered investment and disgorgement of any profits from illegal transactions into the U.S. Treasury. It explicitly prohibits using official allowances or campaign contributions to pay these penalties. Furthermore, it mandates that each supervising ethics office publicly publish a description of every fine assessed, the reason for it, and the outcome, ensuring transparency in enforcement.
This provision makes the mandatory divestiture eligible for the Certificate of Divestiture program under Section 1043 of the Internal Revenue Code. This allows covered individuals (specifically Members of Congress, their spouses/dependents, and the President/VP and their spouses/dependents) to defer capital gains taxes on assets sold to comply with the new ethics rules, provided the proceeds are reinvested in permitted assets.
Section 2(b), new 5 U.S.C. 13152(c)
Why it matters:The use of cross-references to the IRC is standard legislative practice for integrating tax policy. The specific limitation on who qualifies for the certificate is a policy choice, not necessarily evasive.
Case for: Proponents argue that offering tax deferral through Certificates of Divestiture makes the transition to compliance less financially punitive, encouraging adherence to the new ethics standards without undue personal financial hardship, which could otherwise deter public service.
Case against: Some critics might argue that offering tax benefits for compliance softens the impact of the ban, potentially reducing the perceived cost of ethical breaches. Others might contend that the benefit should extend to all covered individuals, not just a specific subset, to ensure fairness.
Estimated impact: Provides significant financial relief for a subset of covered individuals with substantial capital gains from divested assets, by deferring tax obligations.
This clause explicitly excludes 'insurance for which the insured holds a lawful insurable interest' from the definition of 'commodity'. This means that standard insurance policies are not considered prohibited investments under the bill.
Section 2(b), new 5 U.S.C. 13151(1)(B)(ii)
Why it matters:This is standard legislative drafting to clarify the scope of definitions and prevent unintended consequences, ensuring that common financial products like insurance are not inadvertently caught by the ban.
Case for: Proponents argue that this exclusion is necessary to prevent the ban from inadvertently affecting common and essential personal financial products like insurance, which do not pose the same conflict of interest risks as speculative commodities.
Case against: No specific opposition is typically raised against this type of clarifying exclusion, as it prevents an overly broad interpretation of the bill.
Estimated impact: Ensures that covered individuals can maintain standard insurance policies without violating the new investment restrictions, preventing an unintended burden.
This 'Rule of Construction' states that the Act and its amendments shall not be construed to apply to any individual occupying a position under the General Schedule (GS). This explicitly carves out the vast majority of federal civil servants from the investment ban.
Section 2(c)
Why it matters:This is a common legislative technique to clarify the intended scope of a bill and prevent misinterpretation, particularly when the main text uses broad terms. It ensures that the ban is targeted at senior officials and not the broader federal workforce.
Case for: Proponents argue this carve-out is essential to focus the ethics reforms on high-level officials who have the greatest potential for conflicts of interest, without imposing undue burdens on the vast majority of federal employees who are not in policy-making or sensitive positions.
Case against: No specific opposition is typically raised against this exclusion, as extending the ban to all GS employees would be administratively overwhelming and likely unnecessary for the bill's core purpose.
Estimated impact: Excludes millions of federal employees from the investment ban, significantly narrowing the practical scope of the bill to senior leadership and their families.