STOCK Act Spurs a Role Reversal
Senate ‘Feeding Frenzy’ Tempered in the House
Returning from France to consider the new U.S. Constitution, Thomas Jefferson is said to have asked George Washington why the Constitutional Convention felt the need for two legislative chambers.
According to the Senate website, Washington responded with a question: “Why did you pour that tea into your saucer?”
“To cool it,” Jefferson said.
“Even so,” Washington said, “we pour legislation into the Senatorial saucer to cool it.”
But on the Stop Trading on Congressional Knowledge Act, legislation that codifies a ban on insider trading for Members and staff, it was the Senate channeling the volatile public mood and the House — specifically Majority Leader Eric Cantor — who helped to cool the tea.
Two weeks ago, the Senate added numerous provisions in an amendment vote-a-rama that turned the bill into an ethics Christmas tree. Sen. Bob Corker (R-Tenn.) called it an exercise in “self-flagellation,” and Sen. John McCain (R-Ariz.) described it as a “feeding frenzy.”
What helped set it off was a “60 Minutes” segment that alleged Members were in a capacity to use knowledge they gleaned from their positions to profit in their investments. The Senate’s 96-3 vote Feb. 2 after less than a week of floor deliberation put the legislation on a fast track. For a legislative body where routine business gets easily bogged down, it was a remarkably fast run.
When it reached the House, Cantor, working with committee chairmen and other key lawmakers, removed two key Senate provisions before sending the legislation to the floor, where it passed on the suspension calendar, 417-2, last Thursday.
The first key provision removed was sponsored by Sen. Chuck Grassley (R-Iowa) and required political intelligence consultants to register as lobbyists. The second, from Sens. Patrick Leahy (D-Vt.) and John Cornyn (R-Texas), broadened anti-corruption law. The floor process for such a significant bill was noteworthy for the House, as well. The chamber usually reserves the suspension calendar for noncontroversial items, post office namings and the like. And passing the bill under suspension of the rules removes the possibility of amending it on the floor, which happened in the Senate.
Watchdog groups hated Cantor’s actions, and Grassley called the changes “astonishing and extremely disappointing.”
But behind the scenes, Cantor was facing concerns of a different nature. Members expressed alarm that the bill seemed to include contradictory provisions, reached too far, could have criminalized routine behavior and might make insider trading “doubly” illegal.
“Good people are going to go to jail from this,” Rep. Louie Gohmert (R-Texas), a former judge, said in closed-door meetings.
“Great bill. Way to reinforce the fact that we’re a bunch of crooks, even when we’re not. I’m a yes,” Rep. Kurt Schrader (D-Ore.) deadpanned.
The concerns ran the gamut.
“You had folks that wanted to extend it to the press; they wanted to add extraneous provisions to it. You had folks that didn’t want to do anything at all. You had folks that had concerns with particular sentences or sections of the bill in a very mechanical way,” Rep. Patrick McHenry (R-N.C.) said in an interview.
Even Senators, who had sent the legislative fastball over, were pushing the House to tone down what they’d just passed.
“Most Senators are giddy that we improved the bill,” a Republican House Member said.
Cantor boned up on the issue, reading “Throw Them All Out,” the book by Peter Schweizer that the “60 Minutes” segment was based on, and combing through the bill.
Realizing that, politically, the House needed to act, but facing significant unrest, Cantor met with at least 60 Members about their concerns.
Rep. Sean Duffy (R-Wis.), who had introduced a similar bill, said Cantor “knew that something was going to move, he just wasn’t sure what it was going to look like.”
Cantor also reached out to Democrats.
“The [Majority Leader] called, and I was very grateful for that,” said Rep. Tim Walz (D-Minn.), one of the co-authors of the bill as originally introduced. Walz said Cantor offered a “guarantee — he said, ‘You know, if we look into this, we want to make sure we get this right.’ He said there’s a study on the political intelligence piece of this, and if it comes back, he pledged to work with us on that.”
The House bill sets up a decision for Senate Majority Leader Harry Reid (D-Nev.) over whether to pass the House bill or enter negotiations on a compromise. A Senate Democratic leadership aide indicated negotiations are the more likely route.
“It’s viewed as a positive development that the House acted quickly,” the aide said. “But we are not just going to take up and pass the House bill. There is a strong undercurrent that it needs more work.”
There is a possibility of a formal conference, but there is also a chance leaders will work out a deal. “There will be a negotiation, but it is undecided how formal that will be,” the aide said.
On Friday, Leahy and Sen. Bob Casey (D-Pa.) sent a letter to Senate Democratic and Republican leaders calling for a formal conference. They want to restore a Senate provision strengthening existing federal criminal law for acts of public corruption and raise maximum statutory penalties. Cantor stripped that language.
“The anti-corruption amendment adopted by the Senate to the STOCK Act was carefully drafted to avoid ambiguity and lend certainty to the anti-corruption law,” the letter said. “It is precisely the type of narrow Federal criminal legislation that critics of white collar statutes have claimed to want, and it closes important gaps in the Nation’s anti-corruption laws.”