Both editorials applaud the STOCK Act, the effort to end congressional insider trading,which passed in the Senate on Thursday. Both editorials also support the Leahy-Cornyn amendment added to the STOCK Act to close serious loopholes in the nation’s anti-corruption laws.
The Leahy-Cornyn amendment has the support of reform groups and is a crucial step in restoring the ability to investigate and prosecute corruption by public officials.
The New York Times
Congess Moves on Ethics
February 4, 2012
In a politically wise turnabout, the Senate did the right thing on Thursday in approving a long-needed ban on Congressional lawmakers and staffers using confidential information they pick up as government insiders in making stock trades.
The measure, passed by a 96-to-3 vote, seemed imperiled even the day before by a barrage of extraneous amendments to the bill. Perhaps realizing that their feeble standing with the public would only grow worse by blocking an ethics bill, senators went all-out in a bipartisan competition to go beyond the ban. They voted to open lawmakers’ market transactions to monthly online reporting; to disclose their personal home mortgage details; and to include thousands of ranking executive branch workers in this overdue transparency.
The bill also banned bonuses for Fannie Mae and Freddie Mac officials and required registration of the growing “political intelligence” industry — ex-lawmakers and staffers who work the back rooms of Capitol Hill to glean inside information that they sell to hedge funds and other investors. Finally, the Senate approved badly needed “honest services” reforms to better prosecute corruption by public officials.
The strong Senate bill should prompt the House to do no less and preferably more. Representative Eric Cantor of Virginia, the Republican majority leader, was cold to the ban despite support in the House. Now he seems eager to get on the reform train, scheduling action next week. The devil, however, will be in the details. House leaders would be foolish to weaken or delay the reform effort.
Senator Joseph Lieberman, an independent of Connecticut and the bill’s floor manager, jokingly summarized the reform as “mass repentance for past sins.” Congress finally seems aware that jaded voters are hardly laughing.
The Washington Post
The Senate bids to tighten up on insider trading
February 6, 2012
THERE IS a certain belt-and-suspenders quality to the ban on insider trading by members of Congress that was just passed by the Senate. Current law may prohibit such practices. But to the extent that there is ambiguity, it is important, for purposes of both potential prosecution and public perception, to make clear that such activity is indeed illegal. If anything, the measure does not go far enough.
It is bad practice for members of Congress to own and trade in individual stocks. That is particularly true in areas of their direct involvement, such as defense stocks for members of the Armed Services committees. President Obama, in applauding the Senate vote, argued for “prohibiting elected officials from owning stocks in industries they impact.” But given lawmakers’ broad portfolios, the better approach would be for lawmakers to divest individual stock holdings in favor of mutual funds or to put their investments into a blind trust. An amendment to this effect, sponsored by Sens. Sherrod Brown (D-Ohio) and Jeff Merkley (D-Ore.) failed decisively, but lawmakers ought to consider the unattractive optics of owning individual stocks.
Some of the most useful aspects of the Senate measure involve strengthened disclosure rules. The measure would require lawmakers and their senior staff to report stock trades within 30 days; currently they are required to disclose annually. However, as Sen. Jeff Bingaman (D-N.M.) noted in voting against the measure, there is a serious question about the broad scope of an amendment that expanded those disclosure rules to an estimated 300,000 executive-branch employees. In the aftermath of the controversy over VIP mortgage loans made to members of Congress by Countrywide Financial, a new requirement for lawmakers and top executive-branch officials to disclose mortgage terms is reasonable.
Another critical change, and one that is essential to include when the measure is brought up in the House, would restore prosecutors’ ability to go after official corruption. Sens. Patrick J. Leahy (D-Vt.) and John Cornyn (R-Tex.) have proposed such an amendment. The Supreme Court, in a 2010 ruling involving former Enron executive Jeffrey K. Skilling, limited the reach of the “honest services fraud” law to instances of outright bribery and kickbacks. The amendment, a version of which has also passed the House Judiciary Committee, would make it illegal for public officials to engage in undisclosed “self-dealing,” returning an important tool to prosecutors in cases of public corruption.