By ROBERT PEAR
WASHINGTON — The House of Representatives overwhelmingly passed a bill
on Thursday to ban insider trading by members of Congress and to
impose new ethics
The 417-to-2 vote came less than three weeks after President Obama
demanded such action in his State of the Union address. The Senate
approved a similar bill by a vote of 96 to 3 on Feb. 2, but the
lopsided votes concealed deep disagreements over the details of the
legislation.
The swift response and the debate in both chambers showed lawmakers
defensive and anxious about the low esteem in which Congress is held.
The public approval rating of Congress has sunk below 15 percent.
"We need to stop the insidious practice of insider trading, giving
members of this body an unfair advantage over Americans who sent us
here to represent them," said Representative Kathy Hochul, Democrat of
New York. "Let us begin the long process of restoring the faith of the
American people in this institution."
The bill now goes back to the Senate. The two chambers could try to
work out their differences in a conference committee or through
informal negotiations.
Democrats said that House Republican leaders had weakened the
Senate-passed bill by stripping out a provision that would, for the
first time, regulate firms that collect "political intelligence" for
hedge funds, mutual funds and other investors. Under the Senate bill,
such firms would have to register and report their activities, as
lobbyists do.
In place of this requirement, the House version of the bill calls for
a study of whether to require registration of people who collect
political intelligence for the use of investors.
Representative Louise M. Slaughter, Democrat of New York, who has been
pushing ethics legislation since 2006, said that House Republican
leaders apparently "could not stomach pressure from the political
intelligence community, which is unregulated and unseen and operates
in the dark."
Senator Charles E. Grassley, Republican of Iowa, who wrote the
proposed disclosure requirement for political intelligence firms, said
it was "astonishing and extremely disappointing that the House would
fulfill Wall Street's wishes by killing this provision."
However, the House Republican leader, Representative Eric Cantor of
Virginia, said the political intelligence section of the Senate bill
was flawed.
"That provision raises an awful lot of questions," Mr. Cantor said
Thursday on the House floor. "There is a lot of discussion and debate
about who and what would qualify and fall under the suggested language
that came from the Senate. That is why we are calling for a study of
the issue."
The House Democratic leader, Representative Nancy Pelosi of
California, said the House-passed bill had "serious shortcomings" and
was "much diminished" from the Senate version. She supported it, as a
way to advance the legislation, but said, "I don't want anybody to
interpret the strong vote for it as a seal of approval."
Some Republicans described the bill as an overreaction, but voted for
it anyway, saying they could not easily explain their concerns to a
restive public.
In the Senate, the bill — the Stop Trading on Congressional Knowledge
Act, or Stock Act — was written by members of both parties. In the
House, it was revised by Republican leaders, without consulting
Democrats, and it was considered on the House floor in a way that
precluded amendments.
House Republicans had their own reasons for supporting the bill.
Representative Lamar Smith, Republican of Texas and chairman of the
House Judiciary Committee, said: "The risk of government self-dealing
is heightened by the huge growth in recent years of the federal
government and its increasing entanglement with the private economy.
Big government can move markets. That's why we need strong rules to
make sure policy makers are not enriching themselves by the use of
insider information."
The bill would prohibit members of Congress from trading stocks and
other securities on the basis of confidential information they receive
as lawmakers. It says explicitly that they are not exempt from the
federal law and regulations that ban such insider trading.
Moreover, the bill requires members of Congress to disclose the
purchase or sale of stocks, bonds, commodities futures and other
securities within 30 to 45 days of transactions. The information would
be posted on the Web.
A similar disclosure requirement would apply to thousands of federal
employees in the executive branch, including the White House, cabinet
departments and independent agencies.
The House added a provision to prohibit members of Congress, their
aides and executive branch officials from receiving special access to
initial public stock offerings because of their positions. Republicans
said this provision was inspired by an investment in 2008 by Ms.
Pelosi, who was then the speaker of the House.
The legislation, as passed by both houses, would cut off federal
pensions for members of Congress convicted of felonies involving
public corruption.
Ms. Slaughter and Representative Tim Walz, Democrat of Minnesota, led
the charge for the legislation in the House.
"The perception is that members of Congress are enriching themselves,"
Mr. Walz said. "That's not only an affront to our neighbors, that we
are not playing by the rules. It is a cancer that can destroy the
democracy."
Federal securities law does not explicitly exempt members of Congress,
but experts disagree on whether and when lawmakers may be found to
have violated the law. The bill is meant to eliminate any ambiguity.
It says that lawmakers have "a duty arising from a relationship of
trust and confidence" to Congress, the federal government and citizens
of the United States — a duty they violate by trading on nonpublic
information.
G.O.P. Leaders in House Remove Part of Ethics Bill
By ROBERT PEAR
WASHINGTON — With the House poised to take up a major ethics bill,
Republican leaders have deleted a provision that would, for the first
time, regulate the collection of "political intelligence" from
political insiders for the use of hedge funds, mutual funds and other
investors.
House Democrats protested the change on Wednesday, but said they would
still vote for the bill — to ban insider trading by members of
Congress — when it reached the House floor on Thursday. A version of
the bill that the Senate passed last week would require "political
intelligence consultants" to disclose their activities and register as
lobbyists do.
Representative Louise M. Slaughter, Democrat of New York, said
lawmakers and the public needed to know more about the activities of
these professionals, who she said "glean information from members of
Congress and staff and sell it to clients who make a lot of money off
it."
Ms. Slaughter said many people on Wall Street and in the political
intelligence business were lobbying against the registration
requirement, which could force investment advisers to disclose the
clients for whom they did policy research.
In place of the registration requirement, the House Republican leader,
Representative Eric Cantor of Virginia, decided that the House bill
should call for a study of the political intelligence business by the
Government Accountability Office, an investigative arm of Congress.
The study, which could take up to a year, would examine the benefits
of a reporting requirement and "any legal and practical issues that
may be raised" by it.
Laena Fallon, a spokeswoman for Mr. Cantor, said the proposed
registration requirement needed to be studied because it was extremely
broad and could infringe on the First Amendment rights of community
groups, Rotary clubs and local chambers of commerce, as well as
"national media conglomerates."
Senator Charles E. Grassley, Republican of Iowa, who wrote the
provision on political intelligence, said: "It's astonishing and
extremely disappointing that the House would fulfill Wall Street's
wishes by killing this provision. If Congress delays action, the
political intelligence industry will stay in the shadows, just the way
Wall Street likes it."
The bill, passed in the Senate by a vote of 96 to 3, is on a fast
track, with backing from President Obama, who called for swift
approval in his State of the Union address.
The measure would prohibit members of Congress from trading stocks and
other securities on the basis of confidential information they receive
as lawmakers.
Representative Steven C. LaTourette, Republican of Ohio, said, "The
bill is like taking a sledgehammer and killing an ant." But he added:
"Everybody will vote for it. People are afraid not to."
The Senate approved the Grassley amendment on political intelligence
60 to 39. The majority leader, Harry Reid, Democrat of Nevada, and the
minority leader, Mitch McConnell, Republican of Kentucky, voted
against the amendment but for the bill.
Andrew C. DeSouza, a spokesman for the Securities Industry and
Financial Markets Association, which represents brokers and investment
advisers, said, "We're not commenting on the legislation at this
point." Jeff Sigmund, a spokesman for the American Bankers
Association, said, "We have not taken a position on the bill."
People in the industry said the registration requirement in the Senate
bill was so broad that if a group of business executives flew to
Washington and met with a member of Congress, they might have to
register as political intelligence consultants.
Government watchdog groups like Common Cause and Citizens for
Responsibility and Ethics in Washington said the registration
requirement was urgently needed.
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
Together, we can change the world, one mind at a time.
Have a great day,
Tommy
--
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