House bill would ban improper trading in Congress

WASHINGTON -- Members of Congress and their aides would be banned from making securities trades using information they gained through their jobs under legislation its sponsors say has taken on new urgency as the government spends billions bailing out companies.

The bill proposed by Democratic Reps. Louise Slaughter of New York and Brian Baird of Washington would require lawmakers and their staff to disclose within 90 days the purchase or sale of stocks, bonds or commodity futures exceeding $1,000, except for transactions in blind trusts or mutual funds. Members of Congress currently must report their financial holdings and securities transactions in ranges of amounts once a year.

Slaughter and Baird testified on the proposal at a hearing Monday of the House Financial Services subcommittee on oversight.

"By explicitly prohibiting the improper use of sensitive information for personal gain, we will be taking an enormous step in providing transparency while preserving and strengthening public faith in our government and the democratic process," said Slaughter, chairman of the House Rules Committee.

Also appearing before the panel was David Kotz, inspector general of the Securities and Exchange Commission, whose office examined frequent stock trades by two SEC enforcement attorneys in a position to receive sensitive information about agency probes of public companies.

Federal prosecutors and the FBI have been investigating the SEC attorneys' transaction for possible illegal insider trading.

Slaughter and Baird said lawmakers often get early access to sensitive information that can significantly affect stock prices or the overall market, and should be subject to prohibitions against insider trading in the same way as officers and directors of public companies.

A 2004 study by Georgia State University showed that U.S. senators got returns on their investments that were about 25% higher than what average Americans earned.

With tens of billions of taxpayer dollars going to bail out big financial companies and automakers in the economic crisis, concern over congressional integrity is heightened, Slaughter and Baird said. Bank of America, Citigroup and General Motors have been among the bailout recipients.