U.S. President Barack Obama today (Wednesday) signed the STOCK Act into law – a law that doesn't go nearly far enough to rein in Capitol Hill corruption.
A majority of members in both chambers of Congress stymied the efforts of a handful of legislators to make a much tougher law that would have done more to restrict how government officials can profit from non-public information learned on the job.
"This is bipartisanship, but it's not the kind of bipartisanship, cooperation, intended or not, that this nation deserves," said Sen. Chuck Grassley, R-IA, during in a 20-minute floor speech before the vote. "Today's actions only serve the desires of obscure and powerful Wall Street interests."
Grassley was among the few to vote against the bill, which passed 96-3.
The Senate passed the House version of the bill unaltered. Back in February both chambers passed different versions of the bill, with the Senate version having the stricter provisions.
But Senate Majority Leader Harry Reid, D-NV, opted to vote on the weaker House version of the bill instead of sending the bill to a conference committee.
The new law will have some effect, albeit a minimal one.
It increases the amount of financial disclosure required of members of Congress and other government officials. The main change regards the purchase of stock, which now must be reported within 45 days, rather than once a year.
STOCK Act Sidelined for Years
Some cynics saw the whole exercise as a knee-jerk reaction to an expose by CBS News"60 Minutes" last November, which revealed that many legislators, including Speaker John Boehner, R-OH, and House Minority Leader Nancy Pelosi, D-CA, had traded stocks based on information learned on the job.
The original STOCK Act (Stop Trading on Congressional Knowledge) was introduced by Rep. Louise Slaughter, D-NY, six years ago. The legislation languished until the "60 Minutes" report aired.
It's clear that passing the STOCK Act was as much an effort to rehabilitate the poor image Congress has among the public – its approval ratings remain near historic lows – as it was to police its members.
"We took a step toward ending the deficit of trust that's hurting our democracy. The STOCK Act will affirm that members of Congress are not above the law," Sen. Scott Brown, R-MA, a main sponsor of the bill, saidduring the debate.
However, Sen. Lamar Alexander, R-TN, called the legislation "a modest gesture." He told Politico that the STOCK Act changes little – members of Congress were already subject to existing insider trading laws that apply to everyone else.
What the STOCK Act Left Out
While the STOCK Act may well curb insider trading among members of Congress, it could have done much more.
The scuttled Senate version had a provision that dealt with an equally questionable practice – the distribution of Washington inside information to Wall Street hedge fund managers. The Senate bill required disclosure of such events in much the same way federal lobbyists report their activities.
While the provision would not have outlawed the practice, it would have shed far more light on it. Sen. Grassley, who had sponsored the proposal, criticized its removal in his speech.
"This could have been a lot more significant," Grassley said. "It's irresponsible for the leadership to have dropped the ball on requiring political intelligence agents to register. We could have exposed the secret flow of information between Washington and Wall Street."
The House version of the Stock Act merely approves a study of political intelligence practices.
Another scotched provision in the Senate bill would have made public corruption laws tougher and given prosecutors of such cases stronger tools.
"Over in the House, they're just not anxious to let prosecutors more [aggressively] target public corruption and give the public a window into their dealings with the private sector," Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington (CREW), told The Fiscal Times. "If you're a legislator, why do you want to make it easier for prosecutors to go after you if you're going to do something illegal?'
Several other suggested amendments that would have strengthened ethics laws didn't even get as far as the Senate version. One of the toughest would have banned lawmakers and their staff members from going through the "revolving door" to become Capitol Hill lobbyists, a common practice.
But Congress had no stomach to do any more than necessary to claim the STOCK Act "fixes" the problem of insider trading.
"Passing the House version of the STOCK Act will only confirm what most Americans believe: members of Congress are more interested in serving their own interests than the public interest," said CREW policy director Jeremy Miller in a blog post.
Related Articles and News:
- Money Morning:
While the Middle Class Suffers, Congress is Getting Richer – With Help From Legal Insider Trading
- Money Morning:
Are You Outraged Yet?
- Washington Post:
Senate passes scaled-down version of bill to ban insider trading by officials
- Associated Press:
STOCK Act: Senate Passes Insider Trading Ban Bill
STOCK Act passes: Insider trading ban heads to Obama