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Hoping to regain public trust, unpopular Congress wants insider trading ban for its members
WASHINGTON (AP) ' Congress is rushing to take a mostly symbolic step to make clear to voters that its members are banned from insider stock trading, hoping to improve the sagging image that has their approval ratings at historic lows.
Senators were making the first move Monday. Their procedural vote was setting up action ' possibly this week ' to approve a bill that would require disclosure of stock transactions within 30 days and explicitly prohibit members of Congress from initiating trades based on non-public information they acquired in their official capacity. The legislation is aimed at answering critics who say lawmakers profit from businesses where they have special knowledge.
U.S. lawmakers already are subject to the same penalties as other investors who use non-public information to enrich themselves, but many voters don't realize it. No member of Congress in recent memory has been charged with insider trading. In 2005, the Securities and Exchange Commission and Justice Department investigated then-Senate Majority Leader Bill Frist's sale of stock in his family's hospital company, but no charges were ever brought against the Tennessee Republican.
Voters, however, may believe lawmakers paid an annual salary of $174,000 are enriching themselves by making investments based on what they learn in Congress. A recent segment of CBS' "60 Minutes" in November questioned trades by a House committee chairman, the current speaker and his predecessor's husband. Speaker John Boehner, former Speaker Nancy Pelosi and Rep. Spencer Bachus, R-Ala., all denied wrongdoing. Bachus chairs the Financial Services Committee.
"Members of Congress are not above the law," Senate Majority Leader Harry Reid said before Monday's test vote. "We must play by the same rules every other American plays by." He said the bill "will clear up any perception that it's acceptable for members of Congress to profit from insider trading."
A recent Wall Street Journal/NBC News poll of registered voters found 56 percent favored replacing the entire 535-member Congress. Other polls this year have given Congress an approval rating between 11 percent and 13 percent, while disapproval percentages have ranged from 79 percent to 86 percent.
Joseph Lieberman, I-Conn. said, "The numbers of people who have a favorable impression of this body are so low that we're down to close relatives and paid staff. And I'm not so sure about the paid staff."
Said Sen. Scott Brown, R-Mass., one of the bill's authors: "Beginning today, the Senate is embarking on a mission to help address the deficit of trust with the American people."
The bill is entitled the Stop Trading on Congressional Knowledge (STOCK) Act. President Barack Obama endorsed it in his State of the Union speech last week and also raised the issue in his radio and Internet address Saturday.
The White House said Monday in a statement, "The administration believes this bipartisan legislation is an important first step to prevent members of Congress from profiting from their positions and calls for swift passage."
The Senate bill would prohibit lawmakers from tipping off family members or others about non-public information that could influence a stock's price, in addition to the explicit ban itself, and would require members to disclose stock transactions within 30 days. And it would direct the House and Senate ethics committees to write rules that would make insider trading violators subject to congressional punishment.
Other legislative branch employees also would be subject to the ban, but only those who are required to file annual financial disclosure statements would be subject to the reporting requirement. For 2012, employees making $119,554 or more are required to file disclosure statements..
House leaders hope to pass their version of the bill by the end of February, and Majority Leader Eric Cantor, R-Va., said he wants to expand the legislation to include land deals and other transactions.