Congress Repeals Law Requiring Them to Disclose Stock Trades

A year and a half ago, “60 Minutes” unearthed a pattern of stock trading by members of Congress who were using their insider knowledge of pending legislation affecting corporations for personal gain. The exposé was based on the work of one Peter Schweizer of the Hoover Institution, who poked into congressional financial disclosure records when he learned there were no restrictions to bar members of Congress from dealings that “would send the rest of us to prison”. Even in a small sampling, he immediately found examples of suspect trades.

Featuring Steve Croft questioning a startled Nancy Pelosi about a bloc of Visa's initial public offering worth millions — normally reserved for the best clients of the underwriting investment banks — allotted to her and her husband to buy, the CBS piece raised a storm of protest. The full story we ran of our principle-deficient legislators can be found here.

To its credit, Congress hastily dusted off and passed a bill that had been languishing in its corridors for some six years. Called the STOCK Act (Stop Trading on Congressional Knowledge), it prohibits members of Congress and their staffs from using non-public information for private profit and requires that financial records be posted online.

Funny thing just happened. While the nation was preoccupied with gun control legislation, Congress moved to repeal major provisions of the law only a year after it was signed. It acted on a congressionally mandated report by the National Academy of Public Administration that was apoplectic about the excesses of the law. NAPA concluded that requiring some 28,000 officials other than the President, Vice President, members of Congress, and candidates for Congress to report not just trades but all assets, liabilities and financial transactions valued at more than $1,000 poses “unwarranted risk to national security and law enforcement, as well as threaten[s] agency missions, individual safety, and privacy”. Over abuse of privacy we get, but national security? Risk to law enforcement?

First, the repeal would eliminate all reporting requirements for congressional staffers, never mind that they are privy to the same insider information about legislation as the senators and representatives they serve.

But connoisseurs of middle of the night, while no one is watching, self-serving politics will savor what Senators added to the repeal. While they and top officials would still need to report their securities trades and financial data, they will not be required to post them online as the “searchable, sortable, downloadable databases” the law requires. In fact, they will not have to post them online at all.

Our fractious, polarized Senate suddenly came together as one and passed that backstairs escape route without debate and by unanimous consent.

So the information will be public somewhere, but it will be up to us to guess in what dank chamber in the Capitol basement and in what overstuffed file drawer to find it.

Now you know the likely reason for the following fact: Between 2007 and 2010, Americans’ median household net worth dropped by 39%, but rose by 5% for the average member of Congress — and by 14% for the top third. The casino is again open.