The green shoots of reform began sprouting from Capitol Hill's parched ethics landscape immediately after a breathless 60 Minutes broadcast late last year. The report singlehandedly revived the so-called STOCK Act -- "Stop Trading on Congressional Knowledge" -- a bill largely ignored since it was introduced back in 2005. With 60 Minutes' trademark clock ticking away, the show portrayed Members of Congress from both parties apparently using knowledge gained on the job to profit from stock transactions, an illegal activity known as insider trading. Overnight, lawmakers began posturing and speech-making on the need to fix the supposed problem, even as most legal experts agreed that existing statutes already banned insider trading by legislators.
Last week, and by a huge majority, the Senate approved a version of the STOCK Act that goes far beyond the bill's original scope. POGO applauds. And so do several other organizations concerned with how government works. POGO joins them in a letter organized by Public Citizen that will soon be sent urging House lawmakers and leadership to take swift action to approve the bill.
If it becomes law, the new measure will mark a step forward because, first of all, it removes any conceivable doubt about the legal prohibition on Members of Congress and their staffs who might be tempted into insider trading. Not that there was much doubt in the first place. But the law also applies to a reported 300,000 executive branch employees, making their financial disclosures available online (something POGO has long recommended) and dictating that the top executive branch employees, Congress, and their staff report stock and other financial transactions within 30 days.
The bill likewise confronts difficult questions surrounding those who gather so-called "political intelligence." This refers not to lobbying, but to those who get paid lots of money, often by hedge funds and Wall Street private equity groups, to find out how Washington issues directly impact their investments and other business decisions. The measure would require those in the political intelligence industry, which has revenues estimated at $100 million annually, to make detailed government filings, much as lobbyists are currently required to do.
POGO has also supported a measure approved as an amendment that would facilitate prosecutions of corruption by public officials. The Senate likewise supported and rejected a grab bag of other, often loosely-related amendments. Failing to pass was the proposed endorsement of a constitutional amendment in support of term limits, and a permanent ban on earmarks. But an approved amendment blocked millions of dollars in bonuses for senior execs at the federal housing agencies Fannie Mae and Freddie Mac; a provision to deny lawmakers their pensions if convicted of various crimes found its way into the proposed law.
Will passage of the STOCK Act drain Washington's ethical swamp? Given that last week's Senate bill must still be merged with provisions originating in the House, its final form is unclear. Tom Coburn (R-OK), one of only three senators to vote against the STOCK Act, has warned of various flaws, notably that the law establishes a trip wire for prosecution of Members of Congress and others if, for any reason, they fail to file a notice of their financial transactions within the 30 days required. Joseph Lieberman (I-CT) voiced concern that the "political intelligence" provisions were so broadly written as to invite court challenge and possibly ensnare anyone with a legitimate need to contact Members of Congress or their staffs. House Majority Leader Eric Cantor (R-VA) has said he wants to make sure that land deals are included in any ban on using insider information.
In an election year, Congress is still trying to focus on multi-billion dollar budget cuts and the extension of benefits to cover large numbers of the unemployed. Battles loom over defense spending, the mortgage crisis, and jobs. Compared to these great tasks, the STOCK Act -- passed in what Senate Majority Leader Harry Reid (D-NV) called a "circus" atmosphere -- may seem like a slight achievement. On the other hand, when it comes to ethics in Washington, the bill's improvements look significant. They are welcome.
Adam Zagorin is POGO's Journalist-in-Residence.