WASHINGTON — The Senate on Thursday sent the White House a bill to explicitly ban members of Congress, the president and thousands of other federal workers from profiting from nonpublic information learned on the job.
While the bill lets the public see more of government officials' financial dealings, and view them online more frequently, it abandons an earlier proposal to require public reports from people who gather information from Congress – and sell it, mainly to investors.
President Barack Obama repeated his commitment to sign the STOCK Act, which stands for Stop Trading on Congressional Knowledge. "It's a good first step," he said after passage. "And in the months ahead, Congress should do even more to help fight the destructive influence of money in politics and rebuild the trust between Washington and the American people."
The driving force behind the bill was Congress' need to boost its dismal approval ratings, and the perception from a television report that lawmakers are profiting personally from their work. Polls in the past several weeks indicated between 12 percent and 19 percent Americans approved of the job Congress is doing.
The STOCK Act would require that public reports of new transactions exceeding $1,000 be posted online either 30 days after the individual was notified of a transaction in his or her account, or 45 days after the transaction. The House currently posts disclosure information on the Internet, but the Senate still requires people seeking the data to appear personally in a Senate office building.
This would be in addition to the annual disclosure statements filed currently.
In an unusual move, the legislation passed unanimously without a vote on the measure itself. Passage was automatically triggered by a procedural motion that was approved, 96-3. Voting "no" were three Republicans: Chuck Grassley of Iowa, Tom Coburn of Oklahoma and Richard Burr of North Carolina. Sen. Mark Kirk, R-Ill., did not vote.
Just prior to that vote, the Senate passed legislation to help startup companies raise capital by reducing some federal regulations. Some Democrats warned that less government oversight would mean more abuse and scams.
Not everyone in Congress bought into Sen. Joseph Lieberman's view that the insider trading bill was "the most significant ethics reform to pass Congress" in the past five years.
Grassley, who sponsored the abandoned proposal to regulate so-called political intelligence operatives, said, "This could have been a lot more significant. 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 bill does include other reforms. It would deny federal retirement benefits to the president, vice president or an elected official of a state or local government convicted of certain felonies. It also would prohibit senior executives of mortgage giants Fannie Mae or Freddie Mac from receiving bonuses while the companies are under government control. And it would expand the definition of public corruption crimes and increase maximum penalties.
It also would require officials to disclose the mortgages on their primary residences, a provision that has been exempt from reporting requirements.
Lieberman, who managed the bill to final passage, said the plan to regulate political operatives selling information was dropped because of concerns it would violate free speech rights of people who meet with members of Congress. Instead, a one-year study of political intelligence operatives was ordered.
Despite that dispute, the bill's four main sponsors reflected its bipartisan support: Lieberman, an independent from Connecticut; Susan Collins, a Maine Republican; Kirsten Gillibrand, a New York Democrat; and Scott Brown, a Massachusetts Republican whom Democrats are trying hard to defeat.
Another provision eliminated from an earlier bill was designed to strengthen criminal laws in public corruption cases, including restoration of tools used by prosecutors that were limited by a Supreme Court ruling. However, that proposal could be added to other legislation or come back as a stand-alone bill.
Federal insider trading laws have no exemption for members of Congress and other federal officials, but there is little evidence that many lawmakers have been investigated.
Recently, it was learned the Office of Congressional Ethics was looking at the trading activities of Rep. Spencer Bachus, R-Ala. In the two months surrounding the 2008 financial collapse and subsequent $700 billion economic bailout passed by Congress, Bachus made more than three dozen trades. The OCE is an independent ethics office of the House, run by a board outside Congress.
Bachus, now chairman of the House Financial Services Committee but then the panel's senior Republican under a Democratic chairman, participated in closed briefings on the crisis by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson. He's denied using inside information, and subsequent records show he incurred a net loss of $19,490.
Bachus has denied any wrongdoing.