Friday, February 3, 2012

Peter Schweizer Reacts to the STOCK Act Passing in the Senate

Last Thursday, the US Senate passed the STOCK Act, legislation that would ban members of congress from insider trading. From CBS News:

Members of Congress are already subject to insider trading laws. But it is currently within the law for a lawmaker to buy a company's stock after learning, for example, that an upcoming bill will grant that company a large government contract.

The ultimate fate of the STOCK (Stop Trading On Congressional Knowledge) Act, which comes in the wake of a "60 Minutes" story on potential congressional insider trading, remains unclear - though its prospects are relatively good. Passage in the Senate was complicated by a flurry of amendments added to the legislation, including a proposal that senators be prevented from owning individual stocks unless they are in a blind trust, and another that senators who become lobbyists lose their pensions. Some lawmakers expressed skittishness at the efforts to broaden the scope of the legislation...

One criticism of the original legislation - raised by House Majority Leader Eric Cantor - was that the original bill did not also focus on the executive branch. That issue seems to have been addressed: An amendment to extend the new rules to cover the executive branch passed on Thursday 58-41.

In a statement following the vote, Cantor said he was "pleased" with the Senate action -- but added that that the version of the bill passed Thursday still needed to be reviewed. The Virgina Republican said the House would take up the legislation next week; if the House passes an amended version of the bill, it will have to go back to the Senate for another vote.
C4P readers are familiar with Peter Schweizer's work, shining a spotlight on members of Congress for abusing their positions. In a piece published at The Daily Beast on Friday, Schweizer reacts to the STOCK Act bill's passage in the Senate:
The STOCK Act to ban insider trading by members of Congress has sailed through the Senate, 96-3, and many members of the U.S. Senate were no doubt kicking and screaming as they voted for it. Heck, some of the most prominent cosponsors were people that I identified in my book, Throw Them All Out: How Politicians and Their Friends Get Rich Off Insider Stock Tips, Land Deals, and Cronyism That Would Send the Rest of Us to Prison, as having stock-trading activities that correlated nicely with their legislative work.

But let’s not let any of that sour the moment. The U.S. Senate has finally passed an important piece of legislation that reminds us all that members of Congress should abide by the same rules the rest of us do, including those involving insider trading.

I’ve made a lot of enemies in Washington over the past three months. I’ve been called names (by members of both political parties) and threatened with litigation. (My response was “go right ahead.”) But let’s take a moment to talk positively about some of those who made a difference in making this happen. After all, the American West was won by wagon train, and it took a team of dedicated and courageous people to bring us to this point.

The media: There were three news outlets that were determined to get to the bottom of this story regardless of who they ticked off: one on TV, another in print, and a third online. 60 Minutes producers Ira Rosen and Gabrielle Schonder, as well as correspondent Steve Kroft, got a lot of heat when they were working on this story. But despite distorted attacks by very powerful people in Washington, who took an “attack the messenger approach,” they didn’t blink. Bravo. Newsweek’s Peter Boyer (The Daily Beast is the online home of Newsweek magazine) was equally committed to getting to the truth and fought for this story to get out and took a lot of ground fire for it. If these individuals don’t win journalism awards for their work, there is no justice. Online, Andrew Breitbart (with whom I work), was all over this story from the beginning and was willing to go wherever it led, which meant going after both Democrats and Republicans, conservatives and liberals. He was essentially alone on this story. The actions of all of these individuals stand in stark contrast to many members of the Washington media who simply ignored the story or actually attacked it in an effort to curry favor with the Washington establishment. Unfortunately, there are a lot of lapdogs and too few watchdogs.

The politicians: The STOCK Act was introduced several years ago, but could never garner more than nine co-sponsors. Congressmen Louise Slaughter (D-NY), Walter Jones (R-NC), Tim Walz (D-MN) , and Brian Baird (a Democrat who represented Washington state, but who has since left) were doing the early lifting on this bill. They were against congressional insider trading before it was cool. They should be applauded. Once the battle was on, Sen. Scott Brown (R-MA) introduced a similar bill and became one of the most fierce in making sure the issue would not go away. Another warrior is Rep. Sean Duffy, a freshman from Wisconsin who recognizes that the STOCK Act is not nearly strong enough by itself and has proposed the RESTRICT Act, which must be passed next.

The American public: In all the people I spoke to about this problem, not one thought that members of Congress should be allowed to do this. And there were plenty of people who went further than simply being angry: they took action. In Birmingham, Ala., more than 100 Tea Party protesters showed up at Rep. Spencer Bachus’s office to protest his stock-options trading. Within two hours of doing so, Bachus declared his desire to hold hearings on the matter. He is now facing a serious primary challenger.

The passage of the STOCK Act in the Senate is just the first battlefield victory in this war for reform. The STOCK Act makes congressional insider-trading illegal. But let’s be clear: it alone doesn’t go nearly far enough to deal with the problems of cronyism and corruption that we face. It deals only with publicly traded stock, not equity buys in private companies. It does nothing to close the sweetheart deals involving IPO shares that can make politicians more money in one day than a bribe ever could. And insider-trading cases are very hard to win. On top of that, the Securities and Exchange Commission and Justice Department are unlikely to go after a powerful politician. Just look at what happened to the FBI when they were investigating Rep. William Jefferson, who famously took bribes and put the money in his freezer. There were threats to cut the FBI budget!

Schweizer then mentions importance of passing Rep. Duffy’s RESTRICT Act and the need to apply these same ethical standards to the executive branch.

You can read the entire article here.

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