April 5, 2012

The STOCK Act Is Signed Into Law, But Insider Trading Will Live On

Sen. Sherrod Brown (D-OH) failed in his quest to force Members of Congress to place their stocks in blind trusts.

Today, President Obama signed the Stop Trading on Congressional Knowledge (STOCK) Act into law, which overwhelmingly passed both houses of Congress. The law takes aim at insider trading within Congress, which was exposed in a blockbuster 60 Minutes report late last year.

“The powerful shouldn’t get to create one set of rules for themselves and another set of rules to everybody else,” said Obama before signing the bill into law. “certainly should apply to our elected officials, especially at a time when there’s a deficit of trust” in Washington”:

But the bill has many major flaws. As the STOCK Act wound its way through Congress, some of its strongest provisions were severely watered down, while amendments to strengthen the bill were defeated.

One provision that was dropped was one that would’ve “required Washington insiders who sell intelligence to corporate America to register as lobbyists.” “The lobbyists get rich. Wall Street traders get rich. But the American people lose,” said Sen. Chuck Grassley (R-IA) after the provision failed to stay in the final bill.

Meanwhile, Sen. Sherrod Brown (D-OH) authored an amendment with Sen. Jeff Merkley (D-OR) that would’ve forced Members of Congress to divest stock holdings unless they are placed in a blind trust — a reform that would’ve effectively killed congressional insider trading once and for all. That amendment was defeated 26-73.

It’s true that the STOCK Act will implement some crucial reforms. For example, it  places new transparency requirements for stock transactions among Members of Congress, requiring “that public reports of new transactions exceeding $1,000 be posted online either 30 days after the individual was notified of a transaction in his or her account, or 45 days after the transaction.” It but it ultimately does not include provisions that truly would eliminate ethically dubious insider trading by Washington officials.

  • There is no reason to offer a celebratory moment with the signing of this bill. As you explain, insider trading by our elected representatives will live on. For Congress to have even flinched at all over the proposal to place stock holdings in a blind trust is inexcusable. Thank you for linking the voting roll call for that amendment.

  • TRussert

    “which overwhelmingly passed both houses of Congress.”
    I guess Congress thinks we’re going to rejoice in this facade of regulating their greed and vice. Ha! What a joke. This bill does absolutely nothing to stop Congress from profiting from the inside info they are privy to.
    Nice work Obama. Once again you’re selling the rest of us out so you can kiss special interest ass. Just like you were never going to take money from super pacs, or how you were going to change the way Washington works, and a bunch of other campaign BS promises.
    The really sad part is you will be re-elected, but only because you are the lesser of two evils and the majority hasn’t figured out yet how to get a majority united behind a viable independent candidate. You at least better replace that pro Wall Street cabinet of yours who’ve done nothing but loan OUR money to then so they could gamble it away, and then bail them out of their losses with more of OUR money. Rewarded for failure. What a crock of crap. It better stop come November. Read up on French history.

    • dba74

      While I understand your overall sentiment, you’re being too hard on the President. The real blame lies in Congress with the Republican majority in the House, and the lack of a Democrat super-majority in the Senate.

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