WASHINGTON -- Key provisions of the STOCK Act, the bill to bar insider trading by lawmakers, were removed in the latest version unveiled Wednesday in the House by Majority Leader Rep. Eric Cantor (R-Va.).
The overall bill mandates that members of Congress, staffers and the administration be subject to insider trading laws just like anyone else who profits from inside information, and requires the monthly reporting of significant financial transactions.
But provisions that were added by bipartisan votes to the Senate version last week are missing. Perhaps the most significant was a provision authored by Sen. Chuck Grassley (R-Iowa) that would require people who trade on so-called political intelligence -- a rapidly growing practice in Washington -- to register as political intelligence consultants, just like lobbyists.
Political intelligence is insider information gleaned from officials writing laws or rules that can affect businesses, and that is then used to play the market. It's estimated to be at least a $100 million-a-year industry.
Republican leadership sources argued that the Senate measure was overly broad and could ensnare too many people, as some observers also suggested. But proponents of exposing the growing trade in legislative secrets had argued minor tweaks were all that was needed, not the entire removal of such provisions for registering as political intelligence consultants, as is the case with the House bill.
Grassley slammed the decision. "It's astonishing and extremely disappointing that the House would fulfill Wall Street's wishes by killing this provision," he said in a statement. "The Senate clearly voted to try to shed light on an industry that's behind the scenes. If the Senate language is too broad, as opponents say, why not propose a solution instead of scrapping the provision altogether?"
Cantor's office did not address the idea of modifying the measure, arguing that it was unworkable.
"This provision was extremely broad and its impact would have raised more questions than it answered," said Cantor spokesman Brad Dayspring in an email. "Worse, the unintended consequences on the provision could have affected the First Amendment rights of everyone participating in local rotaries to national media conglomerates. For example, members of the media who report on federal and congressional issues to a paid subscriber list might have to register as a political intelligence consultants for their reporting under the provision."
However, the Senate bill included a specific exemption for the press, and its sponsors insisted rotaries and other people who had incidental contact with lawmakers would have nothing to fear from the bill.
Ethics watchdogs said Cantor's surgery on the House version revealed that he is not really interested in curbing such insider trading practices.
"This is not nearly as good as the Senate's," said Melanie Sloan, the head of Citizens for Responsibility and Ethics in Washington. "It's just Cantor trying to trick people into thinking he fixing a problem that he's not fixing. He gets the headline for an insider trading bill, but he's talking out both sides of his mouth."
Cantor also excised an amendment by Sens. John Cornyn (R-Texas) and Patrick Leahy (D-Vt.) designed to crack down on public officials who are caught "self-dealing" and using their offices to enrich themselves.
The Public Corruption Prosecution Amendments Act prohibits undisclosed "self-dealing" by state and federal public officials to ensure that officials cannot secretly act in their own financial self-interest at the expense of the public, and in violation of existing ethics rules and regulations.
A similar measure passed the House Judiciary Committee, led by GOP Rep. Jim Sensenbrenner (R-Wis.), in a unanimous 30 to 0 vote in December.
"These provisions are the culmination of years of work on these issues by Republicans and Democrats in the Senate and the House, and would strengthen and clarify key aspects of Federal criminal law to help investigators and prosecutors attack public corruption nationwide," Leahy said in a statement. "If we are serious about restoring faith in government and addressing the kinds of egregious misconduct that we have witnessed in recent years in high-profile public corruption cases, Congress must act now to enact serious anti-corruption legislation."
Cornyn's office said the senator hopes to restore the language of the amendment to the House bill.
Citizens for Responsibility's Sloan and House Democrats were also hoping to restore the missing provisions after -- and if -- the bill passes the House in a vote expected Thursday. Since it differs from the Senate bill, it would have to go to a conference committee with the Senate to work out the variations.
"We think that enough people in both Houses want a conference and we should be able to get one," said Rep. Louise Slaughter (D-N.Y.), who had her own political intelligence bill with 288 co-sponsors, including 99 Republicans.
Slaughter was unimpressed with a measure that Cantor added to the bill widely referred to as the "Pelosi provision," and aimed at House Democratic Leader Nancy Pelosi of California. The provision bars lawmakers from participating in IPOs, such as a Visa offering her husband Paul bought into.
"She understands that this is a purely political piece of work that I thought was extraneous and totally unnecessary," Slaughter said. "I think the fact they put this in was strictly to cause grief to the leader, and I resent it."
Pelosi herself tweeted, "I support #STOCKAct-also support 'Pelosi provision' & thank @GOPLeader for giving me an amendment but sorry he weakened bill."
Cantor's version of the bill will come up under a suspension of the regular rules, and requires a two-thirds vote to pass. Lawmakers expect it will, setting up the conference to work out the variations between the Senate and House versions.
Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.
House insider trading bill takes dig at Pelosi | Reuters
Senate passes insider-trading bill - CNN.com
Senate to begin debating insider-trading bill - The Washington Post
The Week Ahead: Insider-trading bill hits the House floor - TheHill.com
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Posted: 02/08/12 06:51 AM ET | Updated: 02/09/12 04:20 PM ET