Sunday, April 28, 2013

Washington Insider Trading Is Back Again

In an investigation a year and half ago 60 Minutes uncovered evidence of several instances of insider trading among prominent government officials. In a hurry then to save our public servants from embarrassment, President Barack Obama jumped on board. "Send me a bill that bans insider trading by members of Congress," the president declared in his 2012 State of the Union address. "I will sign it tomorrow." The bill sailed through the Senate on a 96-3 vote, passed the House 417-2 and Obama promptly signed it, noting that its disclosure, and accountability requirements would apply to and demand transparency from virtually everyone in government who had access to inside financial information.

Now this has been undone, my tip off was a April 27th Chicago Tribune editorial that reported Congress had voted last month to repeal part of the STOCK Act that became law just a year ago. The act was designed to discourage insider trading by members of Congress and top government officials. In addition to outlawing trading based on non-public information gleaned by government officials during the course of their public duties, the law required extensive disclosure of financial holdings by Congressional staffers and 28,000 senior executive branch employees.

Well, if you had any real confidence that the STOCK Act would really clean out the insider trading stables in Washington, think again. With both old holes and recent new holes in this smelly piece of legislation it should be renamed "The Rules don't Apply To Us Act" or the "More Cheese For The Rodents Act". While almost no one was looking, this law making it easier for congressional and top executive branch staffers to engage in corrupt trading was signed into law Monday. The law is a modification of the Stop Trading on Congressional Knowledge STOCK) Act. The modification was passed by unanimous consent by both the House and the Senate last week with no debate or even discussion. Don't expect to see, or hear anything about this, on either the news or Sunday talk shows.

If you wanted to see the financial disclosure forms, you’d have to go to the Cannon House Office Building in Washington where all the public records are kept. Only there can you search a database to find the disclosure forms for those who have filed them. But even then, it’s not that easy to find what you’re looking for, the database itself is almost meaningless and the only option for those who want to get a comprehensive look at what some 2,900 staffers have filed is to review the cases one by one, and that’s just too big a job for anybody to do. The STOCK Act was supposed to make this task easier with records posted online in a searchable, sortable and downloadable format. If you wanted to see who traded health care stock just before a committee acted on a health care bill, it was suppose to be easy, no trips to D.C. required.

The bill gutting the prior law and signed by the President last week, however, delayed “the creation of systems that enable public access” to this information until January 2014. Portions of the STOCK Act have been delayed several times already, and with eight months to go, Congress has plenty of time to delay this measure even further, or maybe even repeal it entirely. Before the STOCK Act, insider trading was legal for government officials but illegal for everyone else. The President acknowledged this when signing the bill, arguing that “the powerful shouldn’t get to create one set of rules for themselves and another set of rules for everybody else.” I have not heard of any flowering and reform glowing rhetoric being attached to this recent law.

 It is amazing how quickly and quietly this was done, this proves our government is very efficient and can act quickly and decisively when it benefits our so called public servants in Washington. Congress showed a rare bit of shame after "60 Minutes" reported on stock trading that smelled of opportunism by key members of the House and Senate, but that guilty feeling did not last. The General Accounting Office recently concluded that there are no laws or ethics rules that specifically govern the sale of information by a political intelligence firm. Again it appears that the allure of the cronyism and dirty money is just too much for those in Washington to resist, financial reform does not exist is the black hole known as our nations capital. Still it’s a surprise that Congress passed the law with unanimous consent. Not one of these clowns stood up for us.

Footnote; My original post on this the subject of insider trading by government officials can be seen at the link below. Do not be surprised if I'm less then kind to the Washington crowd.

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