“This is mass repentance for past sins,” Sen. Joseph I. Lieberman (I-Conn.), who managed the floor debate, said half-jokingly as he left the Capitol on Wednesday night.
Senate leaders, who had hoped to quickly approve a modest provision that would formally outlaw equity insider trading by lawmakers and their staff members, instead navigated a mine field of reform offerings that went far beyond the relatively simplistic underlying legislation. Rather than just forbidding lawmakers and their staff members from trading on private information they learned from their positions, the legislation extended restrictions to the executive branch and Washington’s consulting class on a vote of 96 to 3.
During an afternoon of rapid-fire votes Thursday, the Senate extended the insider-trading restrictions to senior members of the executive branch. The legislation now requires lawmakers and senior executive branch officials, for the first time, to reveal all mortgage information for their primary residence. In a unanimous voice vote, the Senate approved a prohibition on bonuses to senior executives at Fannie Mae and Freddie Mac, following reports that the two mortgage giants had approved nearly $13 million in bonuses to 10 executives.
In addition, members of the so-called political intelligence industry — insiders who try to learn in advance the outcome of legislation for hedge-fund and investment-house clients, who then place stock bets based on that information — would now be required to disclose their activities, just as lobbyists trying to influence the outcome must do.
The House, which has a more narrowly crafted insider-trading bill, expects to consider its version of the legislation later this month.
Although the more expansive legislation passed, Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) sidestepped some of the most far-reaching changes ever offered in Congress.
Freshman Sen. Rand Paul (R-Ky.) proposed that former members of Congress forfeit their federal pension and insurance plans if they become lobbyists after retiring from Capitol Hill. Not to be outdone, Sen. Michael F. Bennet (D-Colo.) offered an amendment that would impose a lifetime ban on lawmakers becoming federal lobbyists. Former staff members, currently facing a one-year prohibition on lobbying their former congressional bosses, would have faced a six-year moratorium.
Those provisions were among the proposals that Reid and McConnell agreed to privately scuttle without holding a vote. Another offering — a proposal to permanently ban earmarks, those line items that lawmakers insert into legislation to benefit individual projects — won just 40 votes as the majority decided that the current moratorium is sufficient.
The underlying bill came as a political reaction to a “60 Minutes” report about how members of Congress and their staffs often hold financial interests in companies at the same time they are negotiating legislation that could affect the bottom line of those industries. While congressional insiders generally dismissed that report as overheated, a series of stories last year in the Wall Street Journal and The Washington Post unearthed more damaging information. So junior senators, led by Scott Brown (R-Mass.) and Kirsten Gillibrand (D-N.Y.), leapt in to push legislation that had been offered but ignored since 2005, a bill formally making it illegal to trade stocks based on private information obtained from one’s position on Capitol Hill.
With an otherwise light legislative agenda, Reid gave Gillibrand and Brown the chance to pass their STOCK Act and, in a rare move these days, opened up the process to a free-flow exchange of amendments.
Reid reached the point of exasperation Tuesday night after the first day of debate.
“At some point this becomes ridiculous. . . . It becomes a circus,” he said on the Senate floor, begging his colleagues to finalize their amendments. “What am I supposed to do?”
By Wednesday, the pileup of amendments that had been offered would have turned this minor legislation into potentially the most restrictive ethics bill ever, if they had been added,
With congressional approval ratings in the low teens, leaders became fearful that allowing the strictest amendments to go to a vote would end up with them winning votes, because no one wanted to be on the side of defending a lawmaker’s right to leave the Capitol and make millions of dollars as a lobbyist.
Even after leaders scaled back the amendments under consideration, some senior senators expressed alarm. Sen. Daniel Inouye (D-Hawaii), chairman of the Appropriations Committee, took to the floor to defend a senator’s right to dedicate earmarks to his or her state as part of the Constitution’s grant of the “power of the purse” to Congress and not the executive branch.
“Each one has issues that cannot be fully understood by civil servants located thousands of miles away,” said Inouye, the second-longest-serving senator in history. He then noted the obvious: “However, trust in the Congress is at an all-time low.”