The much ballyhooed STOCK Act’s financial disclosure requirements for senior federal officials could endanger national security and individuals’ safety, a congressionally mandated report found.
The National Academy of Public Administration issued a scathing report on the law, likening mandates that top level staffers disclose personal financial details online to boiling a frog.
“This forthcoming increment in available data could become the fatal temperature change that goes undetected by the hapless frog,” the NAPA’s report said of disclosure and online posting requirements contained in the 2012 law known as the Stop Trading on Congressional Knowledge Act, or STOCK Act.
Under the law, staffers in both the legislative and executive branches paid annually at $119,553 or more must disclose their assets, liabilities and financial transactions valued at more than $1,000, which will then be posted to an online database. Congress in December delayed implementation of the new posting requirements until April 15, to allow time for lawmakers to digest the report before the data is released.
While a request for comment from the office of Senate Majority Leader Harry Reid, D-Nev., was not immediately returned, the report’s findings and recommendations were so negative that another delay could be in the offing when Congress returns from the Passover and Easter recess on April 8.
“When considering the totality of the information gathered in this research, the Panel finds that the preponderance of the testimony presented by agency cybersecurity, national security, ethics, human resources and other experts supports the conclusion that posting personal financial information as required by the act does indeed impose unwarranted risk to national security and law enforcement, as well as threaten agency missions, individual safety, and privacy,” the report said.
Senate Homeland Security and Governmental Affairs Chairman Thomas R. Carper said in a statement that he would review the study with staff before determining a way forward, noting “a number of serious safety concerns that have been raised” by the report.
“The STOCK Act is an important measure that helps ensure that Members of Congress and their staffs play by the same rules that all Americans must follow regarding financial investments,” the Delaware Democrat said.
Among the report’s more troubling findings is that granting easy access to financial transactions of senior officials poses a national security risk.
“Virtually all the cybersecurity, national security, and law enforcement experts interviewed during this study noted that making this information available in this fashion fundamentally transforms the ability (and the likelihood) of others — individuals, organizations, nation-states — to exploit that information for criminal, intelligence, and other purposes,” the report said.
Several groups representing the interests of federal employees have criticized the law from the outset.
In a statement issued after the report’s release Thursday, the American Foreign Service Association expressed the view that the report validated the organization’s concerns, including about security and identity theft.
“The logical conclusion is repeal of this requirement,” AFSA President Susan R. Johnson said. “We strongly encourage Congress to take this opportunity to repeal this provision without delay.”
The NAPA report recommends that Congress impose an indefinite delay on implementation of the online financial transaction database, while allowing other reporting requirements to move forward.
“Based on its findings, the Panel recommends that the STOCK Act’s requirements for online posting of personal financial information not be implemented beyond current coverage under existing law.” the report said. “The Panel believes the federal government should not create public searchable, sortable, downloadable databases for any filer.”
Lawsuits filed by both executive and legislative branch employees against the new public disclosure requirements contend that the new rules would undermine or nullify current requirements that people seeking access to financial disclosure reports disclose their own identities and certify that they will only use the information received for lawful endeavors.
The provision in question came about after adoption of a Senate amendment offered by Richard C. Shelby, R-Ala., that also expanded the scope of the original measure to the executive branch, seeking parity between the branches.
“Sen. Shelby supports parity in application of the STOCK Act. Those similarly situated should abide by the same transparency requirements, regardless of the branch of government in which they serve,” a Shelby spokesman said in an email. “He welcomes the report’s recommendations to more carefully consider how the STOCK Act applies to everyone in government, and believes that we should take this opportunity to develop a disclosure system that promotes transparency in a consistent manner.”
Similar language was included in the final version that became law, which included further changes from House Majority Leader Eric Cantor, R-Va., which drew some criticism at the time. An earlier House bill didn’t include the same provisions.
When President Barack Obama signed the original STOCK Act in April 2012, lawmakers in both parties applauded the measure, but it subsequently faced a barrage of criticism from current and former government employees and security experts, including former Attorney General Michael Mukasey and former Homeland Security Secretary Michael Chertoff.
The STOCK Act and similar legislation had long been floating around Congress without action until “60 Minutes” produced a segment on it along with the potential conflicts of interest by members involved in trading financial instruments.
Emily Cahn contributed to this report.