Walz seeks changes to STOCK Act
WASHINGTON D.C. – Targeting regulation and information gathering at political intelligence firms is the new focus for 1st District Rep. Tim Walz in his efforts to bolster his signature legislation – the STOCK Act.
The STOCK Act (Stop Trading on Congressional Knowledge) bans lawmakers from trading stocks based on non-public information, which has been criticized as insider trading. It required on-line, accessible posting of the financial reports from members, candidates and staffers for the Congress and the executive branch. The bill passed with only five lawmakers in Congress voting against it. Government organizations praised the bill as one of the most important ethics legislation in years and for unifying a heavily divided, inactive Congress.
However, the bill’s public reputation soured last April due to backlash from quickly passed repeals of segments of the bill, which government organizations claim “gutted” the bill. A report order by Congress warned that a few key national security officials could face challenges with the bill’s financial reporting requirement. The highly coordinated changes that were ultimately passed far exceeded the report suggestions by exempting all congressional and executive branch staffers from the reporting. Executive branch top officials and Congress members and candidates are still required to report. A procedural maneuver allowed the repeals to passed with unprecedented speed for Congress: it took just 10 seconds in the Senate and 14 seconds in the House.
Walz, a Democrat in his fourth term, defended the changes due to his concerns for the few top officials. He did criticize how the changes were presented as undermining public faith in the bill, which was aimed at restoring public trust in Congress.
When asked how the bill motivated the heavily divided Congress in its passage and changes, Walz said the bill did not inherently interest lawmakers, but lawmakers did not want to risk being on the wrong side of the bill when it receives public attention. He said the bill also is easy to support because it simply enforces what is expected from Congress: honesty and transparency.
Political intelligence essential to STOCK Act mission
Walz is now focused on adding regulation of political intelligence firms to the STOCK Act, which was what he promised during the bill’s debate.
Political intelligence firms, a $400-million-a-year industry, glean the most up-to-date information on legislation possible through investigations or meetings with lawmakers. The information is then sold to businesses or organizations, giving them an advantage in the stock market. Critics claims this is equivalent to insider trading when it’s non-public information. Several high profile news articles on the firms last month detailed incidents where the firms informed businesses ahead of public announcements in health care areas, allowing for customers to impact the markets.
Walz seeks to have firms register similar to lobbyists and report their interactions with lawmakers. The proposal was originally added to the Senate version of the STOCK Act, but ultimately pulled to ensure the core bill’s final passage. Walz supported the move.
He said he wants the regulation because despite legally allowed actions by the firms, the process has a danger of undermining public faith in the free market and the democratic system.
He said that if any problem trends are shown by the reporting, it could pave the way for even more specific regulations. He said it could also provide a paper trail if any non-public information leaks occur.
Walz is currently working with Rep. Louise Slaughter, a Democrat from New York, and Sen. Chuck Grassley, a Republican from Iowa, the other key lawmakers in the STOCK Act’s passage, to build a coalition of support ahead of pushing the new regulations. Walz said the regulations will be much harder to pass, but hopes media attention will push lawmakers to support them.
Walz said the effort to meet the spirit of the STOCK Act will involve ongoing additions to the law. He plans to also eventually seek reforms of the search engines for the online financial forms to make them easily sortable. This was the original intention of the bill and should be easy to implement. He said the current system seems to have suspiciously been set up in the hardest way possible for searching the reports.
(Josh Moniz can be e-mailed at firstname.lastname@example.org)