The STOCK Act was a media-driven bill that politicians felt they could not resist after 60 Minutes ran a (somewhat flawed) exposé on the insider trading activities of members of Congress. Once a must-pass bill like that gets into circulation, it’s going to become an attractive target for messaging amendments where members try to hitch a ride with their pet issues. And because Congress is held in low public esteem, the best of these amendments would deal with the same kind of ethics issues.
That’s what happened on the STOCK Act debate in the Senate. The bill passed 96-3 yesterday but not before a series of amendments dealing with ethics were added. Far from a major reform effort, however, many of the measures that would actually be meaningful failed.
An amendment by Sens. Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore.) forcing divestiture of stock holdings unless they are placed in a blind trust failed, 26-73. And an amendment by Sen. Rand Paul (R-Ky.) forcing divestiture by many federal officials failed 48-51.
But the Senate agreed to extend the bill’s broader stock transaction reporting requirements to executive branch officials subject to Senate confirmation, a key demand of Republican lawmakers.
A permanent ban on earmarks failed after Appropriations Chairman Daniel Inouye (D-Hawaii) announced his panel would ban earmarks for another year.
And an amendment by Sen. Chuck Grassley (R-Iowa) requiring lobbyist disclosures for political intelligence activities was adopted 60-39. The amendment would require disclosure of political intelligence activities under the Lobbying Disclosure Act of 1995.
The Senate also adopted an amendment by Sens. Patrick Leahy (D-Vt.) and John Cornyn (R-Texas) tightening laws against public corruption, including a ban on gifts to public officials of more than $1,000 in value and restoring the “honest services fraud” statute that the Supreme Court restricted in 2010.
The big deal there is the restoration of “honest services fraud,” which the Supreme Court severely limited to the point of irrelevance in 2010. This harmed a lot of cases, including the case against Enron’s Jeffrey Skilling. Other amendments that passed limited bonuses for Fannie and Freddie, and forced disclosure of the mortgage holdings of lawmakers (a response to the Countrywide “VIP” scandal).
Just because the Senate passed this bill, however, doesn’t mean that this host of ethics reforms will become law. It now moves to the House, and Eric Cantor stands ready to kill the bill with a neat legislator’s trick. He will open it up so broadly that nobody will want to vote for it.
[Cantor’s] now trying to extend the STOCK Act “so it includes land deals and other types of transactions and not just stock trades.” Classic taking a good idea too far. The problem is insider trading in stocks, not insider trading in land deals. Cantor obviously hopes that including a vast array of economic activity within the bill, exposing members of Congress to disclosure obligations and other restrictions, as well as increasing their liability exposure, will make the bill sufficiently unpopular so as to prevent its passage.
Actually, there is a problem with insider trading in land deals – Dennis Hastert, anyone? – but that’s not Cantor’s concern. He wants to make it impossible for anyone to vote for it.
And there are concerns about the base bill from some circles related to prosecutorial discretion, though I’m not sure I agree with them.
The President wants the bill passed right away and Cantor said he would schedule a vote next week. We’ll see if his gambit pays off.