As the House prepares to pass its version of the Stock Act Thursday, Democrats said that even though the changes House Republicans made to the Senate-passed bill had weakened it, they will support it anyway.
Democrats criticized the House version of the Stock Act, or the Stop Trading on Congressional Knowledge Act, which would ban insider trading by members of Congress, for eliminating a "political intelligence" registration requirement and dropping anti-corruption legislation. Political intelligence registration would require analysts and research firms to register with Congress and reveal their contacts on Capitol Hill or in the executive branch of government.
Republicans, however, said they'd made the House bill stronger by adding provisions that extended it to cover the executive branch of government and to ensure that members of Congress convicted of a crime did not receive taxpayer-funded pensions.
One congressional watchdog group, Citizens for Responsibility and Ethics in Washington, or Crew, called the Republican bill a "watered-down version" of the Senate bill.
"Rep. Cantor has opposed the Stock Act from the start, and his bill reflects that," said Crew Executive Director Melanie Sloan. "The majority leader is talking out of both sides of his mouth. He is trying to take credit for finally responding to an issue that has outraged Americans, while behind closed doors he has taken the side of Wall Street and neutered the tough Senate bill."
Reluctantly, Crew, along with Democratic leader Nancy Pelosi, still recommend that the House pass the bill and send it to conference, where the stripped-out provisions could be restored before final passage.
"I support #STOCKAct-also support "Pelosi provision" & thank @GOPLeader for giving me an amendment but sorry he weakened bill," @NancyPelosi tweeted Wednesday afternoon.
Senate Majority Leader Harry Reid had intially stripped the political intelligence requirement, instead preferring to support a year-long GAO study on the issue. During the Senate's amendment process, the requirement was added back into the bill despite the opposition of the Democratic leadership. Republican aides say that the House bill, which also calls for a GAO study, reflects Reid's preference to examine the impact of a requirement more closely.
House Majority Leader Eric Cantor, R-Va., said Republicans removed the two provisions from the Senate bill because they believed they "would have made the bill unworkable or raised more questions [than] they answered."
A senior aide to Cantor further elaborated that the provisions would have raised "broad constitutional questions."
"There are many concerns about the political intelligence provision from members on both sides of the aisle and both sides of the Capitol, news organizations and community groups," Brad Dayspring, deputy chief of staff and communications director for the majority leader, said in an email.
"The unintended consequences on the provision could have affected the First Amendment rights of everyone participating in local rotaries to national media conglomerates. For example, members of the media who report on federal and congressional issues to a paid subscriber list might have to register as a political intelligence consultants for their reporting under the [Senate's] provision."
Republicans argued that they had further strengthened the Senate bill by adding a provision that implicitly targeted Pelosi. That provision amended the Securities Exchange Act of 1934 to stipulate that members of Congress "may not purchase securities that are the subject of an initial public offering … in any manner other than is available to members of the public generally."
At issue is whether Pelosi, when she was speaker of the House, blocked an alternative measure on credit card swipe fees mere months after her husband purchased stock valued at between $1,000,000 and $5,000,000. Visa, which is based in San Francisco, had an initial public offering that was the largest in U.S. history at the time, with about 406 million shares sold and investors paying more than $17 billion for the stock.
A senior aide close to Pelosi has repeatedly refuted accusations that Pelosi enjoyed any preferential treatment or acted inappropriately.
The aide explained the investment as one "made by her husband through his existing broker at Wells Fargo" at the broker's recommendation. The aide said Paul Pelosi bought "a quarter of the shares he purchased at the IPO price" and "went on to buy additional shares as the price rose, including another quarter of the total amount of shares he purchased at nearly double the IPO price."
Another bill to protect consumers written by then-Judiciary chairman Rep. John Conyers passed out of committee in October 2008 but was never brought to the floor of the House for a vote. At any rate, the House had already passed legislation a month earlier, although it stalled in the Senate until it was reintroduced in the next session of Congress after President Obama took office.
In a statement Tuesday night, Cantor referred to the provision without mentioning Pelosi, noting that the House bill would "prohibit members of Congress, executive branch officials and their staffs from receiving special access to initial public offerings due to their positions.
"It is unacceptable for any Member of Congress, federal official or their staff to use nonpublic information for their own financial benefit," Cantor wrote in a statement. "The American people need to be able to trust that officials at all levels of the federal government are living under the same rules they are and aren't using their position for profit in any way."