The Senate leadership has given up on trying to pass their version of the STOCK Act, instead planning a vote on the House bill that cancels out restrictions on so-called “political intelligence,” among other tougher measures.
Senate Majority Leader Harry M. Reid (D-Nev.), in a Tuesday afternoon floor speech, announced that he would not compel a conference committee to hash out the differences between the two chambers’ approaches to the STOCK Act, setting up likely final passage of the legislation by early next week.
Despite calls from some lawmakers and government watchdogs to push the Senate version, Reid announced that it would take up too much floor time to move to a conference committee and then vote on the final version later this spring or summer. Instead, the House draft – also approved on a wide bipartisan vote – will be voted on without any amendments allowed.
The House version of the bill would apply insider trading rules to members of Congress, their staffs, and the executive branch, to discourage trading on non-public information. It would also increase disclosure requirements in a more timely manner.
The two big amendments that lose out here, which were in the Senate bill but excised from the House bill, are the Leahy-Cornyn amendment responding to a Supreme Court ruling that weakened prosecutorial use of the “honest services fraud” statute against public officials and businessmen, and one from Chuck Grassley, on “political intelligence.” Political intelligence analysts scour Capital Hill for information, and use what they gather to advise hedge funds and other Wall Street firms on stock trades. Zachary Roth has a good story with examples of this:
In 2009, an unusual meeting took place at a federal government agency in Baltimore. For around 90 minutes, a group of financial industry professionals grilled staffers at the Centers for Medicare and Medicaid Services, seeking information about an obscure policy question: whether CMS, which oversees the two massive federal health programs, planned to change the reimbursement policies under Medicare for a class of medical devices. The decision stood to affect the bottom line of several companies that produce versions of the device, and the bankers wanted to use what they learned to make investment decisions.
“They hammered us for an hour and a half to try to figure out where we were headed, what our process was, how we’d done things like this in the past,” one CMS staffer at the meeting told Yahoo News. “It was theater of the obscene.”
The Wall Street crowd didn’t learn whether the reimbursement policies would change, but they still got something out of the meeting. “They learned a great deal about the process,” said the source. “So they had an enormous competitive advantage over others in the marketplace.”
Grassley’s bill wouldn’t have banned this type of activity. It merely would have forced political intelligence analysts to register the way lobbyists do. But Eric Cantor snipped that from the House bill, instead doing the classic Washington technique of ordering a study on the political intelligence industry. And now the Senate will merely pass that version. Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell both voted against the political intelligence amendment, which passed barely with 60 votes, so I’m sure they’re not too unhappy about the result. Wouldn’t want to upset Wall Street and all that.
It’s not clear why a conference committee would take up that much floor time at all. The motion to name conferees can be filibustered, but the conference committee process shouldn’t take longer than a week, and that’s only if it would be challenged. This is a bill that passed 96-3, and I didn’t hear anyone, even from the furthest recesses of the right, vow to block a conferee motion. And the conference committee’s work, of course, takes place off the floor of the House or the Senate.
Leahy, Cornyn and especially Grassley are hopping mad about their amendments getting extinguished. Grassley said in a statement, “It’s a victory for Wall Street and a defeat for the American people. It’s a victory for the hedge funds and big banks that like the secrecy of the status quo.” Hard to argue with that.