“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.