U.S. Senators Chuck Grassley and Tom Harkin both voted for a bill to ban insider trading by members of Congress, which overwhelmingly passed the U.S. Senate today. Follow me after the jump for details on how the Iowans voted on significant amendments to the bill, including one backing term limits for members of Congress.
S. 2038, the Stop Trading on Congressional Knowledge or STOCK Act, was designed “to prohibit Members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit.”
This bill sounds like a no-brainer, which is why it passed by an unusually wide 96 to 3 margin. Senate Republicans attempt to filibuster most bills brought up by Democrats, but even the motion to allow debate to proceed on the STOCK Act passed easily by 93 votes to 2. Grassley and Harkin both voted yes on the cloture motion as well as on final passage of the bill. President Barack Obama urged the U.S. House to pass this legislation, saying he would sign it “right away.”
Several proposed amendments to the STOCK Act proved more controversial; most of them failed to pass.
Senators voted down a bipartisan proposal to permanently ban earmarks as well as an amendment to require lawmakers and senior staff to divest of stocks or put their stock holdings in blind trusts. […]
Leaders also denied a vote on an amendment sponsored by Sens. Michael Bennet (D-Colo.) and Jon Tester (D-Mo.) to permanently bar lawmakers from becoming lobbyists and restrict former staff from lobbying their old bosses in Congress for a period of six years.
Senators defeated another amendment sponsored by [Rand] Paul to prohibit executive branch appointees and staff from having oversight, rule-making, and loan- or grant-making authority over companies in which they or their spouses have significant financial interest.
Democrats Sherrod Brown and Jeff Merkley co-sponsored the amendment that would have forced lawmakers and senior staff to either not invest in stocks or have a blind trust manage their stock portfolios. That amendment received just 26 yes votes and 73 nays. Both Grassley and Harkin voted against it.
I like the idea behind Rand Paul’s amendment to “prohibit executive branch appointees or staff holding positions that give them oversight, rule-making, loan or grant-making abilities over industries or companies in which they or their spouse have a significant financial interest.” Even if he proposed it to help Republicans exploit the overblown Solyndra scandal, the concept is sound. The same principle should apply to members of Congress. Grassley voted for Paul’s amendment, as did most of the Senate Republicans. Harkin voted against it, as did most of the Democrats. It went down by 48 votes to 51.
Grassley proposed one amendment to the STOCK Act which passed today by 60 votes to 39. It would “require disclosure of political intelligence activities under Lobbying Disclosure Act of 1995.” For those wondering what Grassley means by “political intelligence activities,” this comes from the text of the amendment, published in the Congressional Record on January 31:
At the end of the bill, insert the following:
SEC. __. DISCLOSURE OF POLITICAL INTELLIGENCE ACTIVITIES UNDER LOBBYING DISCLOSURE ACT.
(a) Definitions.–Section 3 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1602) is amended–
(1) in paragraph (2)–
(A) by inserting after “lobbying activities” each place that term appears the following: “or political intelligence activities”; and
(B) by inserting after “lobbyists” the following: “or political intelligence consultants”; and
(2) by adding at the end the following new paragraphs:
“(17) POLITICAL INTELLIGENCE ACTIVITIES.–The term `political intelligence activities’ means political intelligence contacts and efforts in support of such contacts, including preparation and planning activities, research, and other background work that is intended, at the time it is performed, for use in contacts, and coordination with such contacts and efforts of others.
“(18) POLITICAL INTELLIGENCE CONTACT.–
“(A) DEFINITION.–The term `political intelligence contact’ means any oral or written communication (including an electronic communication) to or from a covered executive branch official or a covered legislative branch official, the information derived from which is intended for use in analyzing securities or commodities markets, or in informing investment decisions, and which is made on behalf of a client with regard to–
“(i) the formulation, modification, or adoption of Federal legislation (including legislative proposals);
“(ii) the formulation, modification, or adoption of a Federal rule, regulation, Executive order, or any other program, policy, or position of the United States Government; or
“(iii) the administration or execution of a Federal program or policy (including the negotiation, award, or administration of a Federal contract, grant, loan, permit, or license).
“(B) EXCEPTION.–The term `political intelligence contact’ does not include a communication that is made by or to a representative of the media if the purpose of the communication is gathering and disseminating news and information to the public.
“(19) POLITICAL INTELLIGENCE FIRM.–The term `political intelligence firm’ means a person or entity that has 1 or more employees who are political intelligence consultants to a client other than that person or entity.
“(20) POLITICAL INTELLIGENCE CONSULTANT.–The term `political intelligence consultant’ means any individual who is employed or retained by a client for financial or other compensation for services that include one or more political intelligence contacts.”.
I enclosed Grassley’s floor statement in support of this amendment toward the end of this post. An unusual bipartisan mix voted for and against the amendment. Harkin was one of the no votes.
Republican Jim DeMint proposed an amendment to “express the sense of the Senate that the Senate should pass a joint resolution proposing an amendment to the Constitution that limits the number of terms a Member of Congress may serve.” Grassley was one of just 24 senators (23 Republicans and one Democrat) to vote for that amendment. Harkin was one of the 75 senators to vote no.
Term limits may sound good in theory, but in practice there is no evidence they improve the functioning of legislatures. It can take years for new members to get the hang of how Congress works. A body of term-limited members would rely more on senior staffers who may have worked in the House or Senate for decades. In this vein, a 1995 academic survey of “nearly 3000 state legislators” found,
There are no systematic differences between term limit and non-term limit states in the composition of the legislature (e.g., professional backgrounds). Yet with respect to legislative behavior, term limits decrease the time legislators devote to securing pork, and heighten the priority they place on the needs of the state and on the demands of conscience relative to district interests. At the same time, with respect to the legislature as an institution, term limits appear to be redistributing power away from majority party leaders and toward governors and possibly legislative staffers.
The Palm Beach Post editors noted in a December 2011 editorial that term limits “sap expertise and empower lobbyists.”
There are plenty of reasons to dislike term limits, and we do. Imposing limits on the Florida Legislature has turned it into an institution run by inexperienced lawmakers easily manipulated by seasoned lobbyists.
Grassley’s office sent out this press release regarding his amendment to the STOCK Act:
For Immediate Release
Thursday, February 2, 2012
Grassley seeks same transparency from political intelligence professionals as lobbyists
WASHINGTON – Senator Chuck Grassley today offered an amendment to require political intelligence operatives to register and disclose affiliations in the same way that lobbyists are required to do.
“Political intelligence professionals aren’t considered lobbyists, so they don’t have to disclose that they’re seeking information and are paid for it,” Grassley said. “As a result, members of Congress and congressional staff have no way of knowing whether such meetings result in information being sold to firms that trade based on that information. My amendment would shed sunshine on this kind of political intelligence gathering.”
According to an October 2011 Wall Street Journal story, political intelligence has become an approximately $100 million industry that employs over 2,000 people in Washington. Political intelligence professionals seek information from members of Congress and congressional staff and then sell the information they gather to hedge funds and other firms that trade stocks and equities based on the information.
Grassley said transparency will help make members of Congress and congressional staff more aware of whether the people they are meeting with are selling information to others who trade on that information.
The Iowa senator offered his amendment, #1493, during Senate debate on the STOCK Act, S.2038. The Stop Trading On Congressional Knowledge bill would clarify that current prohibitions of the Securities and Exchange Commission on insider trading on non-public information extend to members of Congress and congressional staff. It also would speed disclosure by requiring those who file annual financial disclosure statements to report stock and bond transactions within 30 days of the transaction, among other measures.
Here is the text of the floor statement Grassley delivered this afternoon regarding his amendment:
Mr. President, I would like to call up amendment #1493 and make that amendment pending.
Mr. President, the Wall Street Journal recently reported that political intelligence is an approximately $100 million industry. The article also says that expert networks employ over 2,000 people in Washington, DC.
I say approximately because no one really knows how many people work in this industry, who they seek information from, what happens to that information, and how much they get paid. This is the problem.
You have a growing industry with no transparency. If a lobbyist has to register in order to advocate for a school or church, shouldn’t that same lobbyist have to register if they are seeking and getting inside information to make a profit on?
This is especially true if that information would make millions for a hedge fund or a private equity firm.
Under current law, this is not the case.
My amendment merely brings some sunlight to this area. It defines what a political intelligence lobbyist is and requires them to register – the same as any other lobbyist. I understand that some will say that there have not been hearings on this subject and that it should be studied first. But there isn’t much that’s complicated about this amendment.
If you seek information from Congress in order to make money, the American people have a right to know your name and who you’re selling that information to. That’s just basic good government.
This amendment isn’t just helpful to the American people, it also helps members and staff who are trying to decipher their duties under the STOCK Act. Senators have raised the question, “How will we know if the people we speak to trade on what we say?”
By requiring lobbyists who sell information to stock traders to register, members and staff have an easy way to track who they are and who they sell information to. This strengthens the bill and helps members and staff comply with its requirements.
Mr. President, I hope we can consider this amendment soon and bring light and transparency to this growing industry. I yield the floor.
I will update this post if I see any public comments from Harkin about today’s votes.
Representative Dave Loebsack (D, IA-02) sent out this statement on February 2:
Washington, D.C. – Congressman Dave Loebsack released the following statement after the U.S. Senate passed legislation that would ban Members of Congress from making a profit on non-public information. In May, Loebsack was the fourth person in Congress to cosponsor the House version of the STOCK Act. The House has yet to bring similar legislation to the floor. Yesterday, Loebsack took action to force an up or down vote on the House bill.
“I am pleased the Senate finally took action on this important legislation. Now it is time for the House to follow suit and ensure Members of Congress play by the same rules as every American,” said Loebsack. “I have been working since May of last year to end these special privileges and now is the time for action. Mr. Speaker, bring the bill to the floor and pass this legislation.”
Loebsack is also a cosponsor of legislation, the Restoring Ethical Standards, Transparency, and Responsibility in Congressional Trading (RESTRICT) Act, that would go one step further in preventing insider trading. The RESTRICT Act would require Members of Congress to place all of their stocks and other securities in a blind trust, giving a third party the responsibility for managing assets and prohibiting Members of Congress from having any influence over buying, trading, and selling decisions.
Any relevant thoughts are welcome in this thread.