STOCK Act Makes for Difficult Debate
A Senate effort to quickly pass a bipartisan bill designed to reinforce a ban on Congressional insider trading appears to be growing into a politically uncomfortable debate on Congressional ethics.
The Stop Trading on Congressional Knowledge Act has become a magnet for amendments that propose far-reaching ethics reforms. While insider trading is already illegal, backers of the STOCK Act, including the White House, say the legislation is needed to ensure the law will apply to Members of Congress who are privy to nonpublic information.
Senate Majority Whip Dick Durbin (D-Ill.) spoke out against several of the amendments as overly burdensome, particularly to Members such as himself who aren’t as wealthy as others. But he acknowledged that they could be difficult to oppose.
“The problem is that to the general public, each and every one of these may sound like a fairly reasonable idea. But applied to real-life situations, some of them create unreasonable hardships,” he said.
Durbin and other senior Democrats and Republicans alike have criticized Sen. Rand Paul’s proposal to deny pensions to lawmakers who become lobbyists. Many have also panned a proposal by Democratic Sens. Sherrod Brown (Ohio) and Jeff Merkley (Ore.) to force Senators to divest their stock holdings or turn them over to a blind trust.
Durbin also criticized President Barack Obama’s State of the Union proposal to block lawmakers from owning stock in companies that they affect.
“Imagine the application of that to the Finance and Ways and Means committees,” Durbin said. “Which companies do not have tax considerations? … What can you own? So let us be reasonable. I’m for disclosure, but let us be reasonable.”
Sen. Mike Enzi (R-Wyo.) said he had a bad experience with a blind trust and now puts his money in mutual funds.
“You know, when I came here, I put mine in a blind trust. A blind trust is the biggest way to lose money there is. Really, I lost about half,” Enzi said, adding that he opposes the amendment banning stock ownership.
“I think it’s a good way not to have anybody serve in Congress,” he said.
Durbin said he’s looked into creating a blind trust and that it entails significant lawyer and accountant fees.
“For some of us who are not wealthy coming into this business, it just creates some issues,” he said.
Even Paul said the blind trust amendment would hurt Senators of relatively modest means such as himself. His pension ban amendment does not now look likely to get a vote after coming under stiff bipartisan attack.
Sen. Jon Kyl (R-Ariz.), a Finance Committee member, said laws already require disclosure of stock transactions, and he said he doesn’t see a need to require divestiture.
“I think that’s foolish,” he said, asking why someone who has accumulated wealth by investing in American companies shouldn’t be allowed to keep investing.
Kyl also ripped the Paul proposal to revoke Congressional pensions for Members who become lobbyists.
“What’s the point of that? There’s a two-year ban. … I think that’s working pretty well,” Kyl said.
Sen. Bob Corker (R-Tenn.) said the Senate was going through an exercise in “self-flagellation.” He said disclosure requirements are one thing, but banning lawmakers from owning stock is another.
“I think the best way for us to deal with these things is for the public to see what we’re doing,” he said.
Sen. John McCain (R-Ariz.) said he’d vote for the restrictive amendments but that the bill had become a bit of a “feeding frenzy” and seemed headed toward “overkill.”
Indeed, Senate Majority Leader Harry Reid (D-Nev.) has warned that many amendments are not directly relevant to the bill and that he might try to use a procedural motion that would preclude them from being offered.
Paul seemed amused by the bipartisan outcry against his lobbyist pension amendment.
“It seems like, hmm, maybe some of them are envisioning a career as a lobbyist someday,” he said.
The bill also became a bit of a political football as Republicans sought to ensnare the executive branch into the debate, even though executive branch officials are already covered in many cases by more stringent restrictions than Congress. House Republicans have also said they want to expand the bill to include administration officials.
The tension was evident in an exchange on the floor between Sen. Barbara Boxer (D-Calif.), chairman of the Senate Ethics Committee, and Sen. Susan Collins (R-Maine), ranking member of the Homeland Security and Governmental Affairs Committee. Collins is acting as the bill’s GOP floor manager.
Boxer offered an amendment that would require Members of Congress to disclose mortgage information on their personal residences. Currently, there is no such requirement in the disclosure regime.
Boxer said the amendment would help prevent future scandals such as the one involving Countrywide Financial Corp., which is alleged to have given favorable loan terms to some Members of Congress.
“Because there’s no rule that personal mortgages be shown on the disclosure form, all of this was quite a shock when it all came out,” Boxer said.
Collins asked whether it would apply to the executive branch. Boxer replied that it only applies to Members of Congress because the scandal happened in Congress.
“I am here to address our house,” Boxer said sharply. “Maybe there is a problem over there [at the administration.] I don’t frankly know what their ethics rules are. [But] I know what our ethics rules are, and I know we have made a glaring omission when Members here have three, four, five, six and seven homes … and they never have to show them. So let’s clean it up.”
Collins stressed that it’s an important issue that the administration be held to the same standard. She noted that there are two pending GOP amendments that aim to do that. A proposal from Paul would apply the bill’s reporting requirements to federal employees and judicial officers. The other, from Sen. Richard Shelby (Ala.), would require that the members of the administration be included in a provision requiring timely reports of stock trades.
Sen. Scott Brown (R-Mass.) noted that the STOCK Act is based on separate legislation he drafted, which covered the administration. He added that he would not support the Boxer amendment unless it applies across the board.