The number of co-sponsors for a measure explicitly banning such trading has grown from nine last month to 171 “and counting,” Representative Louise Slaughter, a New York Democrat, told the House Financial Services Committee yesterday. She first introduced similar legislation five years ago and never garnered more than 14 co-sponsors.
The issue took on new urgency after the CBS News program “60 Minutes” reported last month that members of Congress bought stock in companies during debates on legislation that might affect the businesses. None of the questioned investments was illegal, the report said.
“This is about restoring faith,” said Representative Tim Walz, a Minnesota Democrat, who is sponsoring the legislation Slaughter supports. “If you think 9 percent approval rating is bad, don’t do anything, drag it out and watch what happens,” he said, referring to polling on Americans’ approval of Congress.
There is a public perception that lawmakers are benefiting from nonpublic information whether they are or not, he said.
The chairman of the House Financial Services Committee, Representative Spencer Bachus, an Alabama Republican, said his panel would vote on legislation next week. A Senate committee also aims to vote on a similar bill before the end of the year.
“It is absolutely essential that we do restore the public’s trust,” Bachus said. “If this is the answer, so be it.”
Bachus was among the lawmakers mentioned in the “60 Minutes” report. The program said that during the 2008 financial crisis, Bachus -- then the top member in the minority on the Financial Services Committee -- bet stock prices would fall while being privately briefed that a global financial meltdown might be imminent.
In a statement to “60 Minutes,” Bachus’s office said he never trades on nonpublic information.
The CBS report sparked new interest by lawmakers in the legislation that Slaughter initially introduced in 2006. The measure would label as securities fraud any trading on legislative information by lawmakers or their staff members. The bill would require any trade of more than $1,000 to be reported within 90 days.
Register Like Lobbyists
The bill would require regulators to draft rules barring individuals and so-called political intelligence firms, which use their contacts in Washington to provide financial institutions with market-related information, from selling nonpublic information obtained from federal employees. It also would require firms or individuals involved in political intelligence to register in the same way as federal lobbyists.
“We’re living in a time when Americans do not trust Congress,” said Representative Walter Jones of North Carolina, a Republican co-sponsor of the bill. “It is a proper first step in maintaining the integrity of Congress.”
In the Senate, Senator Kirsten Gillibrand, a New York Democrat, has introduced bipartisan legislation that would redefine insider trading to include knowledge gained from congressional work and add new reporting requirements for transactions. Senator Scott Brown, a Massachusetts Republican, also has introduced a measure.
Quick Action Sought
Representative Sean Duffy, a freshman Republican from Wisconsin, said the measure should go a step further. He introduced legislation that would require members of Congress to establish a blind trust for all of their stock holdings. If they don’t, lawmakers would have to disclose their stock trades within three days.
“There is a cloud over members of Congress and the trades they make,” he said. “The American people want sunshine.”
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