Congress solves another crisis...really?
GradeGov membership as of Feb. 10 DEM/INDEP=45% GOP=55%
This past week in Congress was a bit weird, even for Congress these days. You see, the Senate was able to debate, amend and pass a bill with very little rancor or partisan politics. The Senate Majority Leader didn’t have to muscle the bill through the Senate by using Leader-reserved tactics to block Minority rights. The bill then went to the House where they debated it for 40 minutes and passed it with only two “no” votes. What was the subject of this bill? Surely it must be a post office naming or some other routine naming bill. Actually, the bill has a weighty name, and on legislative paper, it seems like a very serious issue.
The Stop Trading on Congressional Knowledge act, a.k.a. the STOCK act was the subject of the Senate and House debate this week. This is weird because the main thrust of the bill is already the law of the land. The main momentum behind this bill was a CBS-60 Minutes segment from last November whereby the show outlined that members of Congress make stock trades allegedly while debating legislation affecting those businesses. The segment clearly made it seem that this was all above board and legal. The show left the watchers thinking that members of Congress are above the insider trading laws that are currently on the books.
This is when Congress began to construct several STOCK act type pieces of legislation. Congress wants the American public to know they are concerned about this perception and wants to right the wrong ASAP. The problem is, it is already illegal for members of Congress to trade on knowledge they learn while working as members of Congress. This type of knowledge already qualifies under the current insider trading law. The Securities and Exchange Commission explicitly mentions that government employees are covered under the insider trading laws on their website. (See the 4th bullet point)
Cong. Lungren (R-CA) who is the chairman of the House administration comm. made this fact clear on the House floor today. He said under no circumstances does the current law NOT apply to members of Congress and their staff. The Congressman said this: “The prohibition on insider trading and the criminal penalties associated with it are very much applicable…it is already illegal!”
Why then did Congress spend almost an entire Congressional week debating and voting on something that is current law? It is the opinion of this writer that this subject was basically an easy one to tackle for Congress, an easy one for Congress to comply with and an easy one for Congress to take credit for correcting, since it was already against the law.
Congress has become exceedingly expert on creating a crisis, then solving the same crisis they created, and ultimately expect their constituents to thank them for their presumed rescue from the crisis. This crisis however was one that Congress didn’t even have to create. Thanks to the President when he asked Congress to pass this bill in his State of the Union address, and also CBS, the crises was teed up nicely for Congress.
The STOCK act does add some teeth to the already illegal trading on stock knowledge. The bill adds a provision that members of Congress must disclose trades of $1,000 or more within 30 days. Under the new bill, they will now have to divulge their home mortgages, and members of Congress will now be prohibited from participating in any IPOs. The bill also added a provision that blocks bonuses to Fannie and Freddie executives while they are under government conservatorship.
Much to do about nothing? You make the call. In the meantime, stay tuned for your member of Congress to send you their press release touting this great achievement.