Sometimes, public outrage bubbles up and forces Congress to take action to advance the public interest. The Big Business interests, who normally count on the legislative process operating according to plan, lose control. And that's when they really set to work.
And it's when the public interest advocates and the public itself are tested: With momentum on our side, do we have the attention span and organizational might to defeat aroused corporate interests?
Case in point: The STOCK Act, which aims to block improper use of nonpublic governmental information to gain advantage on the stock market. House of Representatives Majority Leader Eric Cantor is trying to ensure Wall Street traders will be able to continue this form of insider trading.
There is this curious fact: Members of Congress do demonstrably better on the stock market than average investors. There's no plausible reason why this should be so other than that Members use their inside knowledge about legislation under consideration to place informed bets on the stock market.
Reformers, including Public Citizen, have long called for remedial action, to no avail. But the issue suddenly clicked with the public after 60 Minutes ran a piece last November.
As public anger mounted, it became impossible for Congress not to act.
Last week, the Senate passed the STOCK Act to prevent congressional insider trading. As the bill was being considered, amendments made it stronger. Notably, the Senate reinserted a provision on lobbyists, hedge fund managers and Wall Street traders obtaining and using inside government information. The provision is very modest, requiring only that so-called "political intelligence" consultants register.
"Political intelligence professionals aren't considered lobbyists, so they don't have to disclose that they're seeking information and are paid for it" when they meet with elected officials or staffers, says Senator Charles Grassley (R-IA), who introduced the amendment. "As a result, members of Congress and congressional staff have no way of knowing whether such meetings result in information being sold to firms that trade based on that information. My amendment would shed sunshine on this kind of political intelligence gathering."
Wall Street hates this measure. There's a mini "political intelligence" industry that obtains information from political insiders and uses or sells it on Wall Street. You can see how knowing that a committee chair plans to add an obscure provision to a piece of legislation could translate into major, short-term advantage on the stock markets. Hedge funds love this kind of stuff.
Integrity Research Associates estimates the value of the global market for policy research and political intelligence services at roughly $402 million in 2009. They identify major lobby firms as among the leading political intelligence operations, including Patton Boggs, Akin Gump Strauss Hauer & Feld and Cassidy & Associates.
Wanting to preserve their unfair advantage from inside congressional information, Wall Street lobbyists urged the provision to be removed. Republican Majority Leader Eric Cantor did strip the provision, though he says he did so in response to requests from both sides of the aisle, rather than Wall Street lobbyists.
It was quite a brazen move by Cantor. He knows Wall Street is unpopular. He knows the Democrats are going to attack him over the move. He has to know that he is defending the ability of a small slice of Wall Street traders gaining unfair advantage in the markets.
Now the ball is back in our court. The House and Senate versions will go to conference committee so that differences can be worked out (or alternatively, congressional leadership might just negotiate a deal). It's up to us to take action now to force Congress to eliminate Eric Cantor's Wall Street insider trading loophole by putting this provision back into this legislation.
This piece has been updated from the original version posted to report that Rep. Eric Cantor claims he removed the political intelligence in response to bipartisan requests rather than Wall Street lobbyists.