Both Democrats and Republicans on the House Financial Services Committee advocated new restrictions on insider trading on Tuesday, after previous efforts to pass restrictions all failed to advance in Congress.
Though the issue had been sidelined, it re-emerged after a report last month by the CBS News program “60 Minutes,” which said members of Congress bought stock in companies during debates on legislation that might affect the businesses.
Though none of the investments were illegal, according to the report, the news further rattled faith in a legislative body that has been rendered largely ineffective by partisan positioning since Republicans took control of the House of Representatives in January.
“This is about restoring faith,” said Representative Tim Walz, a Minnesota Democrat who is sponsoring legislation to explicitly ban insider trading. “If you think a 9 percent approval rating is bad, don’t do anything, drag it out and watch what happens,” he said, referring to polling on Americans’ approval of Congress.
House Financial Services Committee chairman Spencer Bachus, an Alabama Republican, said the panel would vote on legislation next week. “It is absolutely essential that we do restore the public’s trust,” said Bachus. “If this is the answer, so be it.”
Bachus was among the lawmakers mentioned in the “60 Minutes” report. CBS reported that during the 2008 financial crisis, Bachus, then the ranking Republican on the Financial Services Committee, bet stock prices would fall while being briefed privately that a global crisis might be imminent. In a statement at the time, Bachus’s office denied he ever traded on nonpublic information.
Still, the CBS report led lawmakers concerned with public perception to take another look at legislation first introduced in 2006 by Representative Louise Slaughter, a New York Democrat. Reintroduced this year by Representative Walz, the measure would label as securities fraud any trading on legislation information by lawmakers or members of staff. The bill would require all trades of more than $1,000 be reported within 90 days.
The bill would require regulators to draft rules barring individuals and political intelligence firms from selling nonpublic information obtained from federal employees, and would require any firms or individuals involved in political intelligence to register in the same way as federal lobbyists.
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Meanwhile, the Senate’s Homeland Security Committee is examining similar bipartisan proposals to restrict certain trading by lawmakers and their aides.