Pick a random member of Congress, and chances are, they're wealthier than you. In all likelihood, they're far wealthier than you.

According to research by the Center for Responsive Politics, 250 members of Congress, or roughly 47%, are millionaires. The median net worth of a U.S. senator stood at $2.6 million in 2010.

Not bad. The median net worth of U.S. households is closer to $100,000.

But as momentum grows for the passage of the STOCK Act, many voters are wondering whether some of that wealth was built by trading stocks based on insider information that Congress members received because of their position in Washington. As the law currently stands, Congress can trade on insider information without fear of prosecution.

To some extent, it doesn't really matter if Congress members actually are trading on insider information. The law prohibits the rest of us from doing it, so Congress should be held to the same standard.

That said, we couldn't help but wonder whether there was anything fishy about congressional stock trading, so we decided to poke around.

Digging into the data
Going a long way toward facilitating our research, the Center for Responsive Politics' website OpenSecrets.org provided us with a database of congressional trading activity stretching from 2004 to 2010.

While working with the database was far preferable to slogging through thousands of pages of individual personal disclosure filings, there was still nothing quick or easy about it. All told, OpenSecrets sent us a database of nearly 150,000 transactions that occurred in that six-year period. And while having the information in spreadsheet format was infinitely easier to work with than the scanned paper forms, it still suffered from the same shortfalls we outlined in the disclosure filings.

As a result, that meant that asset descriptions had to be interpreted and, in the case of stocks, matched to proper tickers. It also meant that some transactions were of little use because of lack of dates, transaction values, or other pertinent information (which was the fault of the filers and the disclosure forms, not OpenSecrets).

However, after organizing and interpreting some of the data, we were able to clearly see once again exactly why it's imperative that we get new legislation around congressional stock trading in place.

Trading through the financial meltdown
A perfect example of what we're concerned about was on full display during the financial meltdown at the end of 2008. In September of that year, the crisis hit a fever pitch and Washington was front and center, pulling levers left and right in the financial sector to head off a full-blown collapse.

Here's a reminder of just a few of the major government actions during the month:

  • On Sept. 7, Fannie Mae and Freddie Mac were put into conservatorship.
  • On Sept. 16, the Federal Reserve swooped in with an $85 billion bailout of AIG.
  • On Sept. 19, the SEC imposed an emergency ban on short-selling.
  • Also on Sept. 19, the Treasury announced that it would insure money market funds.
  • From Sept. 21 through the eventual signing on Oct. 3, Congress debated and eventually passed the $700 billion Troubled Asset Relief Program that funneled tens of billions to financial companies like Citigroup, Bank of America, JPMorgan Chase, and Wells Fargo.
  • On Sept. 21, the Federal Reserve allowed Goldman Sachs and Morgan Stanley to convert to bank holding companies.

And I could go on.

The bottom line is that during this period, there was a significant amount of nonpublic information that lawmakers in general could have been privy to. In particular, members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services would have had more access than most to information that was poised to significantly impact the share prices of certain financial companies.

During a period of intense and extensive legislation like this, one might think -- or at least hope -- that Congress members would be extra prudent, avoiding any appearance whatsoever that they were trading based on material information that they may have had access to. The data show just the opposite.

From Sept. 1, 2008, through Oct. 3, 2008 (the signing of TARP), Congress members traded $6.7 million worth of financial-company shares. That compares to $1.7 million of financial-company shares traded during the same period of the prior year. That tally came as those lawmakers made a total of 318 trades in such companies, a big leap from the 115 trades that were made in the same period of 2007. And that only includes trades for which there was a specific date entered in the disclosures -- and there were plenty that didn't include specific dates.

And what of the most-informed House and Senate committees? Laudably, it appears that members of the Senate Banking Committee showed prudence and had little, if any, financial-stock trading activity during this period. On the other hand, members of the House Financial Services Committee made a total of at least 28 trades worth nearly $650,000 in total.

Getting intimate
In 2008, Rep. Spencer Bachus, R-Ala., was the ranking minority member of the House Financial Services Committee. That would have put him right in the middle of many of the crucial discussions that had the potential to seriously swing stocks in the financial industry.

Looking back at Bachus' personal accounts during 2008 reveals that while the most serious chapter of the financial meltdown was unfolding, he was pocketing thousands by trading General Electric options. Many investors will remember that GE was right in the middle of the financial-meltdown scrum thanks to its giant finance arm.

Between Sept. 10, 2008, and Sept. 19, 2008, Bachus traded $25,217 worth of GE options through 13 transactions. Those trades earned him $5,240. Not a bad take in just over a week.

Bachus did not return our requests for comment.

The curious case of Anthony Weiner
Of course, it's not just the one-month stretch in 2008 that we're concerned about. And when it comes to tracking down fishy trades in mountains of past data, it becomes a lot like searching for that proverbial needle in the haystack.

Which brings us to former Democratic Rep. Anthony Weiner of New York. The majority of Weiner's trading while in Congress was unremarkable -- that is, like many other members of Congress, if his investing track record was notable for anything, it was for the extent to which he would have been better off simply investing in an S&P 500 index fund and calling it a day.

But there was a pair of trades in particular that stood out from the rest. In mid-January of 2008, Weiner purchased shares of struggling bond insurers MBIA and Ambac. The trade is notable for a few reasons. First of all, Weiner's disclosure forms paint him very much as a buy-and-hold investor, but in this case, he turned around and sold both stocks just over a month later. They're also notable because they are two of the top-performing trades of Weiner's entire congressional tenure -- between the Jan. 17 purchase date and the Feb. 27 sale, MBIA shot up 61% while Ambac skyrocketed 95%.

The final notable aspect was the events taking place around that time period. Both based in New York, Ambac and MBIA are part of the heavily regulated insurance industry, meaning that it was quite possible that New York regulators and lawmakers would have access to information about these companies before it reached the investing public. During that month, MBIA raised $1 billion in new capital and announced plans to split apart its municipal and structured-finance insurance businesses -- moves that encouraged Standard & Poor's to positively revise its view of MBIA and helped send shares of both companies soaring.

At the very least, the timing of Weiner's trades seems extremely fortuitous. However, if he was privy to nonpublic information (and we have no actual evidence to say that he was) concerning the bond insurers and then traded based on that information, there would have been no legal ramifications.

We attempted to contact Weiner's spokeswoman to talk about these trades, but she did not get back to us.

What does this all prove?
If you're thinking we're trying to lay out a case for accusing any of these Congress members (current and former) of what-should-be-illegal insider trading, let us put your mind at ease: We're not.

In terms of putting together a case to prove insider trading, the details above are at best just the barest of circumstantial evidence. But the point is this: There should be no reason for us to question Congress members' stock trading.

What exactly does this mean? Consider this comparison. For all of the vilification that investment banks and private equity firms have been subject to in Washington over the past few years, their policies regarding stock trading put Congress to shame.

We spoke with two finance firms about their trading guidelines. In both cases, there's no "shoot first and ask questions later" when it comes to trading stocks in personal accounts. Both companies require that employees pre-clear any trades with the compliance department before hitting the buy button.

And as for nonpublic information, if anyone in the company is given nonpublic material about a publicly traded company, the stock goes on a companywide restricted list and nobody at the entire company can trade in that stock. If Congress functioned this way, as soon as anyone on (for example) the Senate Banking Committee ended up with nonpublic information about JPMorgan Chase, nobody in Congress would be able to trade in that stock. Period.

This is something we should never have to say: "If only we could hold Congress to the same high moral standards as investment banks."

At the end of the day
To be clear, not every member of Congress appears to be trading on insider information. In fact, the financial disclosure filings of a great many legislators are completely and utterly boring -- and that's a good thing.

Nor do we want to see Congress members excluded from the wealth-building power of the stock market. Far from it. After all, we are The Motley Fool and encourage stock investing as a means of building long-term wealth. However, as members of the primary lawmaking body of the country, Congress needs to be held to a high standard -- a standard that, at the very least, discourages them from day trading stocks in the industries that they're setting rules and regulations for.

At the end of the day, with a plurality of lawmakers that don't give us any reason to fret about insider trading, it's that much more mind-boggling that Congress has yet to enact legislation that would end this discussion. With voters already finding plenty of reasons to wag their fingers at Congress, there's no reason to allow this issue to continue to raise questions about this entire branch of government.