Monday, November 28, 2011
There have been a handful of members of Congress who have been saying for years that the congression-al exemption from insider trading laws was wrong. And as right as they were, they were routinely ignored.
Enter a somewhat odd couple: “60 Minutes,” the television news magazine produced by CBS, which is about as “mainstream media” as it gets, and Peter Schweizer, a fellow at the Hoover Institution, a think tank that is about as conservative as it gets. Suddenly there’s a virtual stampede among members of Congress — especially those considered vulnerable in their home districts, as The Hill points out — to sign on to the STOCK Act, or reasonable facsimiles. STOCK is an acronym for Stop Trading on Congressional Knowledge, and while many acronyms are stretches, this one hits the mark.
The “60 Minutes” report built on the insider trading accusations in Schweizer’s book, “Throw Them All Out,” which makes a multi-faceted argument for a congressional clean sweep.
The Nov. 13 episode reported that several members of Congress, including House Minority Leader Nancy Pelosi, D-Calif., and Speaker John Boehner, R-Ohio, appear to have profited handsomely from inside information. They and others have denied any such impropriety. If their protestations are to be taken at face value, then they should have no problem with a law that would help ensure that they and their colleagues continue to walk the straight and narrow.
The STOCK Act would prohibit members of Congress and federal employees from trading stocks based on nonpublic information obtained on the job. It would also attempt to rein in the dissemination of information between congressional staffers and people working in what has come to be known as the “political intelligence” industry.
The history of the STOCK act is a sad commentary on how Congress works — or doesn’t.
A former congressman, Brian Baird, a Washington state Democrat, introduced bills in the 109th Congress in 2006, the 110th in 2007 and the 111th in 2009. Over those years, the bills garnered a total of 31 co-sponsors, 28 Democrats and three Republicans. In each case, the bill was assigned to a committee, where it died.
Latest effort
Tim Walz, D-Minn., introduced the STOCK Act into the 112th House session on March 17. It got one co-sponsor and, like its predecessors was assigned to committee, presumably facing a similar unhappy fate. Three weeks ago, it gained eight more co-sponsors. And then came “60 Minutes.” In the five days following the report, the bill got 84 more co-sponsors, including two from this area, Democrat Jason Altmire, Pa.-4th, and Republican Bill Johnson, Ohio-6th. While the local co-sponsors are bipartisan, overall the tilt is 78 Democrats and 21 Republicans.
Two similar bills were introduced in the Senate, one by Scott Brown, R-Mass., and one by Kirsten Gillibrand, D-N.Y.
There are two overriding reasons for Congress to take the need for self-regulation seriously. One is that a nation that can no longer trust its representatives to pursue anything but their own self-interest cannot long survive as a democracy. The other is that investors large and small must have confidence that they are operating on a level playing field, or a nation cannot prosper under capitalism.
At a time when Congress and Wall Street are under withering review, some variation of the STOCK Act should get serious consideration. The decision by House Financial Services Committee Chairman Spencer Bachus to give the bill a long-overdue hearing on Dec. 6 is a start.
Some in Congress may think that this issue will pass. If they choose to invest their futures on that premise, they could be making an error that proves fatal to their careers.