The U.S. House overwhelmingly approved the Stop Trading on Congressional Knowledge (STOCK) Act today, but House leaders amended the bill U.S. senators passed last week. An amendment offered by Republican Senator Chuck Grassley of Iowa will be at the center of negotiations on the House-Senate conference committee charged with reconciling the two versions of the STOCK Act.

The STOCK Act passed the House by 417 votes to 2 (roll call), with all five representatives from Iowa supporting the bill. But don’t let the near-unanimous vote fool you: the House version of this bill was controversial.

[R]hetorical support for the bill was tempered by the House GOP decision to amend the Senate-passed bill. Most importantly, the House version of the bill does not include language clarifying that political intelligence consultants must register as lobbyists.

Several Democrats said they were disappointed in that omission, but said it is still important to pass the bill in order to get it to a House-Senate conference. [House Minority Leader Nancy] Pelosi said explicitly that many Democrats were holding their nose on this issue in order to re-fight it in conference.

“Pass this bill, go to conference,” she said. “It’s very important that the House and Senate meet to discuss these very important issues.

“I don’t want anyone to interpret the strong vote for it to be a seal of approval,” she said. […]

The House bill does require a study on whether and how to regulate political intelligence consultants, which Pelosi dismissed as “just a dodge.” But Republicans said they stripped out this language because it’s not so easy to regulate such consultants.

The Senate language “raises an awful lot of questions,” Cantor said. “It think there’s a lot of discussion and debate about who and what would qualify and fall under the suggested language that came from the Senate.”

Grassley proposed that language when the Senate debated the STOCK act last week. Bleeding Heartland posted the text of Grassley’s amendment here, along with his Senate floor statement explaining the need to “require political intelligence operatives to register and disclose affiliations in the same way that lobbyists are required to do.”

Grassley made clear yesterday that he wasn’t happy about the House Republican leaders’ action.

“It’s astonishing and extremely disappointing that the House would fulfill Wall Street’s wishes by killing this provision.   The Senate clearly voted to try to shed light on an industry that’s behind the scenes.  If the Senate language is too broad, as opponents say, why not propose a solution instead of scrapping the provision altogether?   I hope to see a vehicle for meaningful transparency through a House-Senate conference or other means.   If Congress delays action, the political intelligence industry will stay in the shadows, just the way Wall Street likes it.”

The Democratic Congressional Campaign Committee was out with a press release this afternoon bashing Representative Steve King for the missing provision from the STOCK Act:

King Fails to Fight For Stronger STOCK Act

Representative Steve King (IA-04) [sic] failed to stand up for a tougher government reform and anti-corruption STOCK Act today that would prevent insider trading. Instead, King let his Republican leadership eliminate the crack downs on those who peddle political inside information for profit and remove an anti-corruption provision.

Even Republicans including Senator Chuck Grassley blasted House Republican leaders for undermining the bill aimed at banning insider trading saying he was disappointed “that the House would fulfill Wall Street’s wishes by killing the provision.”

“Representative Steve King let special interests win and failed to fight his Republican leaders when they watered down common-sense ethical reforms to ban insider trading and crack down on public corruption,” said Jesse Ferguson of the Democratic Congressional Campaign Committee. “Despite a national demand to pass tough accountability and transparency measures to protect the public, King let crucial reforms get stripped out. Sadly, King and his Republican leaders blocked bipartisan common-sense reforms to remove insider information or public corruption.”  

There’s a double irony here. First, Democratic Senator Tom Harkin voted against Grassley’s amendment when the Senate considered the STOCK Act. (I never saw any public comment from Harkin explaining that vote.)

Second, King had already released a statement arguing that the STOCK Act isn’t strong enough:

“Today I voted yes on the STOCK Act, which incorporates some ideas that I have been pushing for years as part of my Sunlight Act, such as ensuring that financial disclosures by Members of Congress are posted online in a searchable and sortable format for the general public. And while I support the underlying purpose of the STOCK Act to prevent Member insider trading, I am disappointed that the bill doesn’t do more. Even with passage of the STOCK Act, Members will still be able to hide their true income and net worth within large income ranges. This kind of reporting is not transparent. The Sunlight Act will ensure that the general public has the tools they need to identify which Members might be improperly profiteering from their official duties, and I hope that the House will follow today’s approval of the STOCK Act with a continued push for greater transparency in Members’ finances through passage of the Sunlight Act.”

Two other Iowans in the U.S. House released statements about the STOCK Act today. Both Republican Tom Latham (IA-04) and Democrat Dave Loebsack (IA-02) took credit for co-sponsoring the legislation.

LATHAM-SPONSORED STOCK ACT PASSES U.S. HOUSE

 LEGISLATION CRACKS DOWN ON INSIDER TRADING AMONG FEDERAL OFFICIALS

WASHINGTON, DC – Legislation that enacts strict new rules to keep federal officials, including members of Congress, from engaging in insider trading was approved early Thursday in the U.S. House of Representatives.  The House version of the STOCK Act, sponsored and supported by Iowa Congressman Tom Latham, contained stronger measures aimed at strengthening the bill and closing loopholes than those contained in the Senate version.

“The American people need the peace of mind that members of Congress and federal officials are held fully accountable for their actions and the consequences of those actions,” Latham said.  “The Stock Act passed by the House strengthens the insider trading laws every American citizen is already subject to by clarifying and expanding their scope for members of Congress, their staff and federal officials.”

The version of the STOCK Act, which was approved by the House by an overwhelmingly bipartisan vote of 417-2, would strengthen provisions approved by the Senate to ensure that federal officials don’t engage in unfair trading practices.  The House version would apply the ban on insider trading to all members of Congress, Capitol Hill staff and high-level executive branch officials.  The House legislation also would make sure federal officials do not receive special and unfair access to initial public offerings.

Washington, D.C. Congressman Dave Loebsack today voted in favor of legislation banning Members of Congress from making a profit on non-public information.  Loebsack has been a longtime proponent of the STOCK Act.  He was the fourth person in Congress and the first Iowan to cosponsor the House version of the bill.  The Senate passed similar legislation last week and now the differences between the two versions must be worked out.

“The STOCK Act should have been brought up for a vote a long time ago, but I am pleased leadership finally agreed to bring it to a vote.  The American people’s faith in government has been badly damaged.  This legislation is needed to begin restoring trust in Congress,” said Loebsack.  “Though this legislation does not go as far as I had wished, this is a big first step and it is my hope that the bill can be strengthened even further.”

Loebsack has also called for taking additional steps to further prevent insider trading.  The Restoring Ethical Standards, Transparency, and Responsibility in Congressional Trading (RESTRICT) Act, would require Members of Congress to place all of their stocks and other securities in a blind trust, giving a third party the responsibility for managing assets and prohibiting Members of Congress from having any influence over buying, trading, and selling decisions.

Grassley delivered another Senate floor speech today about his amendment to the STOCK Act. I enclose the full text below.

Floor Speech of Sen. Chuck Grassley

Political Intelligence Amendment to the STOCK Act

Delivered Feb. 9, 2012

I would like to speak as if in morning business on my amendment to the STOCK Act.

In the dark of night Tuesday, the House released its version of the STOCK Act, which wiped out any chance at meaningful transparency for the political intelligence industry.

What we are faced with is a powerful industry that works in the shadows.  They don’t want people to know what they do or who they work for.  They are afraid of sunlight.

My amendment was adopted here in the Senate on a bipartisan basis, a rare occurrence recently.  It simply requires registration for lobbyists who seek information from Congress in order to trade on that information.

It’s straightforward.  If trades are taking place based on political intelligence obtained from Congress or the executive branch, people should know who is gathering such information.

Not requiring political intelligence professionals to register and disclose their contacts with government officials is a gaping loophole that my amendment fixes.  In fact, political intelligence firms actually brag about this loophole.

For example, on its website, the Open Source Intelligence Group, a political intelligence firm, says the following:

“Our political intelligence operation differs from standard ‘lobbying’ in that The OSINT Group is not looking to influence legislation on behalf of clients, but rather provide unique ‘monitoring’ of information through our personal relationships between lawmakers, staffers, and lobbyists.

Providing this service for clients who do not want their interest in an issue publicly known is an activity that does not need to be reported under the Lobbying Disclosure Act, thus providing an additional layer of confidentiality for our clients.

This service is ideal for companies seeking a competitive advantage by allowing a client’s interests to remain confidential…”

If you didn’t hear it the first time, let me repeat some of that for you,

“Providing this service for clients who do not want their interest in an issue publicly known is an activity that does not need to be reported under the Lobbying Disclosure Act, thus providing an additional layer of confidentiality for our clients.”

You have it here on paper.  This firm is telling potential clients, if you don’t want anyone to know what you are asking of federal officials, hire us.  That’s just wrong, but that’s why firms like this don’t want to register.

           If somebody on Wall Street is trying to make money off of conversations they have with senators or staff, we should know who they are representing.  It’s just that simple.

Since the passage of my amendment, which would require political intelligence lobbyists to register as lobbyists, I have heard a great deal of “concern” from the lobbying community.

Political intelligence professionals have claimed that they should do their business in secret for several reasons.

First, they’ve said that if they are required to register, they will no longer be able to sell information to their clients because people will not want to hire them.  That makes me wonder, what do they have to hide?

Second, they have said that many of them have large numbers of clients, and it would take them a lot of time to register these large numbers of secret clients.  Again, that makes me think we need more transparency to find out who all these people buying political intelligence are.

Third, they have claimed that it would not address the so-called “20 percent loophole” that allows people who spend less than 20 percent of their time lobbying from having to register as lobbyists.

Well, on this, I have some good news for them.  We don’t make the mistake that caused the 20 percent loophole.

My amendment requires anyone who makes a political intelligence contact to have to register.   No loopholes, no deals, no special treatment – everyone registers.

Finally, I just want to assure people: Journalists won’t need to register.  A constituent looking for information in order to make business decisions won’t have to register.  Only political intelligence brokers, people who seek information so that others can trade securities, would have to register.

As I said before, if people want to trade stocks from what we do here in Congress, we should know who you are.  The American people deserve a little sunlight into this industry.  Last night the House turned away from transparency.  The House supported the status quo.

What we need is a full and open conference process so that Congress, both the House and Senate, can work together and improve this bill.  If not, I worry that we will miss the best opportunity we have had for openness and transparency in years.

Any relevant comments are welcome in this thread.