WASHINGTON -- Members of Congress, battling single digit approval ratings, are paying attention to the perception that some lawmakers enriched themselves through insider trading.
Bills in the House and Senate are getting hearings, and the House Ethics Committee has sent out a memo reminding lawmakers that insider trading could violate the law and House rules.
The interest was sparked by a CBS' "60 Minutes" story Nov. 13 that reported members of Congress can legally trade stock based on non-public information. The House memo makes clear this is not true.
The Senate Homeland Security and Governmental Affairs Committee will hold a hearing Thursday on a bill to prohibit insider trading by members of Congress and their employees. The chief sponsor is Sen. Scott Brown, R-Mass., who is running for re-election in the normally Democratic state against consumer advocate Elizabeth Warren.
Rep. Louise Slaughter, D-N.Y., has been introducing her bill to ban insider trading by lawmakers since 2006. Before the "60 Minutes" story, there were nine sponsors; now there are 118, and the House Financial Services Committee has schedule a hearing Dec. 6.
Brown's bill would prohibit members or employees of Congress, as well as executive branch employees, from using nonpublic information – obtained through their public service – to invest money for financial gain.
The legislation is known as the STOCK Act. The letters stand for Stop Trading on Congressional Knowledge.
The House Ethics Committee memo compiled previous advisories on the use of non-public information. The memo said members of Congress may be liable as insider traders, whether they obtain nonpublic information outside of their official duties or as part of them.
In addition, the memo said insider trading may violate federal civil and criminal laws. The memo suggested that lawmakers read a new report by the Congressional Research Service titled, "Insider Trading and Members of Congress."
Brown insisted that current law does not clearly define whether government officials trading on inside information is considered illegal.
Slaughter said, "I'm particularly pleased because my colleagues are really starting to understand that light needs to be shed on insider trading and political intelligence which has been creeping into the halls of Congress for years now.
"The fact that any one of us would think to personally profit off the information that's shared with us upsets me greatly. Members of Congress and their staff should be subject to the same rules as everyone else."
The "60 Minutes" segment highlighted financial transactions involving Democratic leader Nancy Pelosi; Rep. Spencer Bachus, R-Ala., chairman of the Financial Services Committee; and Speaker John Boehner, R-Ohio. All three previously denied wrongdoing.
Boehner said, "I think there are plenty of rules of the House and certainly rules from the SEC (Securities and Exchange Commission) that members should follow and I believe do follow. I have not made any decisions on day to day trading activities in my account and haven't for years. I do not do it, I haven't done it, and I wouldn't do it."
Pelosi spokesman Drew Hammill said, "Among the many facts `60 Minutes' chose to ignore in their story is that leader Pelosi supports the STOCK Act." Hammill disputed a "60 Minutes" claim that Pelosi blocked a financial bill in 2008. He said the bill was reported out of committee on the last day of regular session – too late for a vote in the full House. It was the same day that the House approved the massive Wall St. bailout.
Bachus said the CBS program relied on a book that had "a disturbing number of factual errors. But above all, the book's insidious allegation that I personally profited from nonpublic information is a total lie."
Congress is struggling with an approval rating that keeps sinking lower.
An Associated Press-Gfk poll in October showed Congress receiving a 16 percent approval and 82 percent disapproval. A CBS poll in early November showed a 9 percent approval rate and 83 percent disapproval, while a Gallup poll around the same time showed 13 percent approved and 82 percent disapproved.