A scaled-back ethics bill headed toward likely passage in the House on Thursday despite complaints from senators that Republican leaders had jettisoned several key provisions that won overwhelming Senate support last week.
House Majority Leader Eric Cantor (R-Va.) unveiled legislation that formally bans lawmakers and staff members from making financial trades based on non-public information they receive in their positions. Rather than holding an open, freewheeling debate, as the Senate did last week, House Republicans have put the ethics legislation on a fast-track schedule that forbids amendments and requires a two-thirds majority for passage.
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Despite those restrictions, Republican and Democratic leaders pledged their support for their version of the Stop Trading on Congressional Knowledge Act, or Stock Act, on Wednesday, making its passage highly likely and setting up a showdown with the Senate over how to reconcile the competing measures.
Cantor nixed a provision that would have required a burgeoning K Street industry of consultants who glean inside information about legislative proposals, then alert their clients — hedge funds and other investment houses — about the likely outcome so they can buy or sell their stakes in advance. Unlike federally registered lobbyists, who disclose their actions and sources of income, the political intelligence industry has operated below the radar.
“It’s astonishing and extremely disappointing that the House would fulfill Wall Street’s wishes by killing this provision,” said Sen. Charles E. Grassley (R-Iowa), sponsor of the Senate-approved amendment. “The Senate clearly voted to try to shed light on an industry that’s behind the scenes.”
Instead, the House version will mandate a federal study of the industry — which has annual revenue of $100 million to $400 million — so recommendations can be made for legislative action next year. Laena Fallon, a Cantor spokeswoman, said the Grassley version “was extremely broad and its impact would have raised more questions than it answered” because it did not properly clarify who would have to disclose their actions, as lobbyists do.
In addition, the Cantor draft dropped a bipartisan provision that the Senate approved on a unanimous voice vote that would have restored some elements of federal corruption law that the Supreme Court unanimously rejected last year. This “honest services” provision served as the basis for the prosecution of lawmakers, lobbyists and former congressional staffers in connection with the investigation of lobbyist Jack Abramoff, as well as the prison sentences issued to Enron executives, but it was declared overly broad by the court.
A bipartisan group from the House and Senate judiciary committees had crafted language restoring some “honest services” provisions.
“If we are serious about restoring faith in government and addressing the kinds of egregious misconduct that we have witnessed in recent years in high-profile public corruption cases, Congress must act now to enact serious anti-corruption legislation,” Sen. Patrick J. Leahy (D-Vt.) said.