Since a 60 Minutes report showed that Rep. Spencer Bachus (R-AL) profited from information he obtained in private economic briefings in 2008, Congress has moved quickly to pass a bill to ban insider trading by its members. The Senate passed its version by a vote of 96-3 on February 2nd. President Obama praised the vote and promised to sign the bill — he had called for insider trading legislation in his State of the Union address in January.
Before any of that can happen, however, the House needs to vote on its version, which could happen as early as this week. The House’s version of the bill, however, is shaping up to be considerably different than the Senate’s.
House Majority Leader Eric Cantor (R-VA) has made several changes to the legislation which appear intended to at least weaken the final product, if not to kill it outright. The government watchdog group Citizens for Responsibility and Ethics in Washington (CREW) laid out some of those changes:
CREW strongly supported the Senate approved version of the STOCK Act (S. 2038) passed by an overwhelming bipartisan vote of 96 to 3. S. 2038 goes well beyond merely prohibiting insider trading by, among other things, requiring registration by political intelligence consultants, stripping pension benefits from corrupt members of Congress and closing serious loopholes in the nation’s anti-corruption laws.
The bill Rep. Cantor is bringing to the floor removes several of these provisions. Although the House Judiciary Committee passed nearly identical legislation late last year, the new bill drops the Leahy-Cornyn amendment, which responds to court decisions that have undermined prosecutors’ efforts to target public corruption. It also excludes the Grassley Amendment, which would require political intelligence consultants to register with Congress.
Cantor had also tried to expand the legislation to ban other transactions, such as land deals. As UCLA law professor Stephen Bainbridge noted, “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.”
Despite Cantor’s public protestations that “it is unacceptable for anybody in this body to profit personally from non-public information,” his changes to the STOCK Act have unnecessarily made it weaker. As Rep. Louise Slaughter (D-NY), a chief sponsor of the bill, put it, “I think strengthening here is a euphemism for weakening.” It is also worth noting that, when Bachus proposed an insider trading bill to help repair his image, Cantor blocked it from going forward.
If the House passes a different piece of legislation than the Senate, they will need to be reconciled before they can be signed into law. As the statement from CREW notes, the sections which Cantor removed could still be added back to the final bill in conference, which is why they are still calling for members to vote for passage.