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A long-languishing bill to ban stock trading on inside information that lawmakers glean at private hearings and discussions has begun moving toward passage. The bill was lifted from hibernation by a new study from the Hoover Institution and a report on “60 Minutes” detailing the apparent freedom lawmakers have long enjoyed from the insider trading ban that applies to the rest of America.
The reports question the trading practices of leading legislators in the House like Speaker John Boehner, Nancy Pelosi, the Democratic minority leader, and Spencer Bachus, chairman of the House financial committee, when issues like health care reform and the financial crisis occupied center stage. All deny any wrongdoing but, with many others, are jumping aboard legislation offered five years ago by Louise Slaughter, a Democrat of New York.
Ms. Slaughter first proposed the bill when a Republican staffer privy to inside information was discovered making thousands of day trades from his office. The measure gathered dust and only nine co-sponsors — until the “60 Minutes” report was broadcast Nov. 13. Since then, more than 130 other members have signed up.
That report complemented research by Peter Schweizer of the Hoover Institution tracking the stock profits and legislative activities of lawmakers who wind up millionaires. Earlier university studies had found stock-trading legislators smartly outperforming the market by 6 percent to 12 percent in the 1980s and 1990s.
The potential for trading on insider information from the halls of Congress is undeniable and needs to be policed. Indeed, Congress should have protected itself long ago.
Peter Schweizer discussed the bill on Fox News Business, but doesn't believe it goes far enough. He doesn't think that the SEC will prosecute congressmen once the bill is passed out of the fear of having their own budget cut.