STOCK Act: Insider Trading Bill To Receive Senate Vote Next Week [UPDATE]
WASHINGTON -- A Senate bill banning the trading of corporate stocks by members of Congress based on nonpublic political information will see a vote next week, according to Democratic sources working on the bill.
"It'll be on the floor next week, either hotlined or an actual vote," one source said of the bill, known as the STOCK Act. Hotlining refers to the process of moving a bill through by unanimous consent.
A separate Democratic aide said that negotiations over amendments were still ongoing, which would make hotlining more difficult. A Democratic leadership aide, meanwhile, would only say that a vote was "possible."
The STOCK Act, authored by Sens. Kirsten Gillibrand (D-N.Y.) and Scott Brown (R-Mass.), would ban trading by members of Congress guided by nonpublic economic or political information. It would also improve disclosures of all stock trades and other financial maneuvers by members of Congress, by requiring them to publicly detail each transaction within 30 days. Lawmakers are currently granted a full year of secrecy before disclosing such financial activities.
The bill received a big boost on Tuesday when President Barack Obama called for its enactment during the State of the Union address.
"Send me a bill that bans insider trading by members of Congress; I will sign it tomorrow," Obama said.
Immediately after the speech, Senate Majority Leader Harry Reid (D-Nev.) told reporters he would back the bill.
The STOCK Act is the product of two different good-government bills, one authored by Gillibrand and another by Brown. Senate Homeland Security and Government Reform Committee Chairman Joe Lieberman (I-Ct.) merged the two bills, retaining a few elements of Gillibrand's that went further than Brown's.
The Gillibrand bill not only makes it expressly illegal for a member of Congress to trade on insider information, it bans members from tipping off others. In addition to making insider trading a criminal offense, Gillibrand would make it a violation of congressional rules, paving the way for speedier ousters of offending members. Both provisions were accepted as part of the committee-approved bill.
One of the bill's shortcomings has become a political issue in Brown's 2012 re-election bid. While the bill bans trading, it does not bar legislators from performing political favors for companies whose stock they hold. So long as a lawmaker does not actually sell the stock, but merely watches it increase in value (and perhaps pay out better dividends), members of Congress will remain in the clear. Brown's Democratic opponent, Elizabeth Warren, has spoken out in favor of expanding the legislation to ban this activity.
Brown himself performed major legislative favors for big banks during the final round of debate over 2010's Wall Street reform bill. And according to his latest personal financial disclosure form, the Massachusetts Republican owns up to $50,000 of Bank of America stock.
As the financial overhaul approached passage, Brown was the deciding vote determining whether the bill would clear a filibuster in the Senate. He used that position to leverage several changes to the bill that helped large financial institutions, carving out an exemption to the Volcker Rule that allows big banks to continue placing risky bets in the securities markets with taxpayer money, provided they do so through private equity firms and hedge funds. Brown also helped save Bank of America and other banks billions of dollars in up-front costs by axing a plan that would have required them to pay into an emergency fund to cover the costs of big bank failures.
Since the passage of Wall Street reform legislation, it's worth noting that Bank of America's stock has fallen substantially, meaning Brown has lost money. At the time of the bill's passage, however, the share price would likely have fallen faster and deeper had the bill not been amended to eliminate the fund BofA would have been tasked with funding. Money transferred from BofA to the government comes out of shareholder wealth.
During the State of the Union, Obama also said he wanted to "limit any elected official from owning stocks in industries they impact."
UPDATE: 5:15 p.m. -- A cloture vote is now scheduled for 5:30 p.m. on Monday, requiring 60 votes, Reid said on the Senate floor Thursday.
White House Press Secretary Jay Carney put out a statement Thursday night calling for "swift passage" of the bill:
Today, Leader Reid announced the Senate will take-up legislation making it clear that Members of Congress may not engage in insider trading, an important component of the President’s blueprint for an America built to last. As the President said in his State of the Union message, this bipartisan legislation will help limit the corrosive influence of money in politics and restoring the American people’s trust in Washington. Members of Congress should not be able to trade stocks based on nonpublic information gleaned on Capitol Hill nor should they be able to own stocks in industries they impact. We believe this is an important first step to prevent members of Congress from profiting from their positions and call for swift passage.