The week started off propitiously for the Stop Trading on Congressional Knowledge Act. In a 93-2 cloture vote, the U.S. Senate voted to take up a law to ban insider trading in Congress.
The 93 votes in favor of bringing the STOCK Act to the floor told us this was going to be a popular law. Really popular. (It wound up passing 96-3 last night.) But as it turned out, the STOCK Act was almost too popular. Within hours of the cloture vote, senators began showing up with amendments both related and not so much -- as one and all tried to hitch pet projects to what was seen as a "must-pass" bill.
Thanks are therefore due to Sens. Joe Lieberman and Susan Collins, floor managers of the bill, who managed to corral their respective allies into an agreement to vote on just 20 amendments, quickly, then move on to vote the actual STOCK Act itself up or down.
The amendments that did get attached to the act were mostly benign:
- A provision ensuring that if lawmakers must disclosure their stock trades within 30 days of making them, so too must roughly 2,000 senior officials within the executive branch.
- A populist, if unrelated, measure to forbid paying bonuses to top execs at Fannie Mae and Freddie Mac.
- Another to strip lawmakers of their federal pensions upon conviction for certain crimes.
- And a more on-point requirement that lawmakers disclose the terms of their home mortgages (echoes of the housing bust).
- As well as a requirement that traffickers in political intelligence register themselves, just as lobbyists need to.
Three cheers for the Washington sausage factory
The basic bill survived mostly intact. We now have the law we asked for. A law that:
- Clearly bans the practice of lawmakers trading on information they acquire in the course of conducting their duties.
- States that lawmakers have a duty of trust and confidence to Congress itself, to the U.S. government, and to the citizens of the United States -- crucial to applying the same insider trading laws that regulate the rest of us to Congress itself.
- And requires lawmakers to publicly disclose their stock trades within 30 days of their taking place, and requires that these disclosures be made available online.
It remains to be seen, however, how all of this will play next door to the Senate, in the U.S. House of Representatives. As you'll recall, the House is the body that originally gave birth to the STOCK Act, through the tireless efforts of Rep. Louise Slaughter and then-Rep. Brian Baird (whose mantle was taken up in this most recent edition by Rep. Tim Walz).
Progress in the House hit a roadblock last year, however, and the House has for the most part sat out this debate ever since, as the Senate took the lead in moving toward passage. But now it seems likely that the House will join its senatorial colleagues in finalizing this legislation. Earlier this week, House Majority Leader Eric Cantor confirmed that while he was waiting to see what form the Senate version of the act eventually took, he was "committed" to getting a bill passed in some form this very month.
And now, it looks like he's actually stepping on the gas. In the wake of last night's Senate vote, Cantor updated his commitment, promising to bring the STOCK Act to a vote on the House floor next week. "Insider trading by members of Congress is unacceptable," Cantor said. "We will pass a bill this month. We're committed."
Glad to hear it. So are we.
Fool contributor Rich Smith does not own (or short) shares of any company named above. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.