|STOCK Act vote, political intelligence disclosure|
|News Releases - Stage & Theatre|
|Written by Grassley Press|
|Friday, 23 March 2012 14:24|
Please note: Several news accounts are describing Sen. Grassley’s vote as against the anti-congressional insider trading bill, the Stop Trading on Congressional Knowledge, or STOCK Act. Here’s an explanation of the vote:
Sen. Grassley voted against cloture on the STOCK Act, not against the STOCK Act itself. There was a unanimous consent agreement that if cloture were invoked, the bill would be adopted. That obviated the need for a roll call vote on final passage of the STOCK Act. Sen. Grassley supports the STOCK Act. He voted against cloture to proceed to the STOCK Act because the Senate leadership stripped out his political intelligence registration provision, and he wanted the opportunity to offer his amendment.
Also, here’s Sen. Grassley’s statement on the Senate floor from earlier today.
Statement by Senator Charles E. Grassley
Consideration of the Anti-congressional Insider Trading Bill,
Minus Political Intelligence Registration
March 22, 2012
Bpartisanship is alive and well here in Washington, DC.
On Tuesday the Republican Majority Leader of the House and the Democrat Majority Leader of the Senate worked together to thwart the will of 60 Senators and 286 Members of Congress.
This is not the kind of bipartisan cooperation we need.
I won’t ascribe motives to anyone in this body, but I know that today’s actions only serve the desires of obscure and powerful Wall Street interests and undercut the will of an overwhelming majority of Congress.
They took a common sense provision supported by a majority of both Houses of Congress — and they simply erased it.
The provision simply says that if you seek information from Congress or the executive branch to trade stocks – Congress, the executive branch, and the American people ought to know who you are.
But, the leadership of both parties went behind closed doors, and they made that provision magically disappear.
What they did was a truly amazing procedural sleight of hand.
First, the Majority Leader in the House said that the definition of political intelligence was so “vague” that he couldn’t possibly figure out how to define it.
That’s the excuse given for stripping any regulation of it from the STOCK Act. To me, that came as something of a surprise.
I would like to read Section 7 part b of the version of the STOCK Act that was rammed through the House of Representatives:
“Definition – for purposes of this section, the term ‘political intelligence’ shall mean information that is derived by a person from direct communications with an executive branch employee, a Member of Congress, or an employee of Congress; and provided in exchange for financial compensation to a client who intends, and who is known to intend, to use the information to inform investment decisions.”
That seems pretty straightforward, doesn’t it?
Of course, now that definition will only be applied to a study, not to legislation with any real teeth.
If you think that’s bad, this is what happened to the STOCK Act in the Senate.
By now I think just about everybody in this body knows how passionately I feel about this amendment.
I have spoken repeatedly about the dangers of unregulated political espionage.
I have reached out to leadership to express my concern and written a letter with Senator Leahy on the importance of our STOCK Act provisions.
I said that I was willing to negotiate on the language of my provision.
What was the response?
I wasn’t even given the courtesy of being notified before cloture was filed.
It was an ambush, plain and simple.
Just like those people who traffic in political espionage, this process has been cloaked in secrecy.
Now the claim is made that the Senate was forced to take up the House bill, because an unnamed Republican was threatening to object to a conference.
However, no Republican, or any Senator for that matter, has publically owned-up to trying to stop this bill from going to conference.
But, even if we accept this fact, there are still more questions.
Supposedly, we are taking up the House bill because the Senate does not have time to take two more cloture votes.
Throughout this Congress, we have spent weeks in nothing but quorum calls but suddenly, we have run out of time.
Of course, in less than ten days, we will be leaving Washington, D.C., for a two week recess.
Here is an idea. With congressional approval ratings in the near single digits why can’t we spend part of that recess getting the STOCK Act right.
The Washington Post said that my amendment, combined with Senator Leahy’s political corruption amendment, “transformed the (STOCK Act) into the most sweeping ethics legislation Congress had considered since 2007.”
Isn’t that worth taking two extra votes?
I think so, but apparently others disagree.
At the end of the day, here is what will happen.
There are over 2,000 people working in the completely unregulated world of political intelligence, or political espionage as I call it. Right now, they are celebrating.
They are celebrating because they know that its business as usual.
They can continue to pass along tips they get from Members of Congress, Senators and staff and no one will be the wiser.
They pass along these tips to hedge funds, private equity firms and other investors who pay them top dollar.
The lobbyists get rich.
Wall Street traders get rich.
But the American people lose.
That is the tragic result of the Majority Leader’s decision.
Through my oversight investigations, I have learned that political intelligence gathering for Wall Street is growing field, ripe for abuse.
Here are just two examples of the type of activity that will continue to be kept in the dark.
No record is kept of these meetings and employees are essentially on the honor system to make sure that they are not giving investors inside information.
As an example, the whistleblower who came to us claimed that over a dozen CMS employees spent nearly two hours briefing Wall Street analysts and investors on the taxpayer’s dime.
A member of the public could not walk in and get that kind of access to information.
CMS is supposed to be working for us, but instead, we found out that they were working for Wall Street.
If my amendment fails we won’t know how many of these meetings occur throughout the government and who profits from these meetings.
Another example was an investigation I conducted into the Obama Administration’s Department of Education.
The Department of Education was getting set to issue regulations on gainful employment that would affect for-profit colleges.
Several hedge funds had bet big that those new regulations would make it harder for for-profit colleges to do business.
Then, news began to leak out that those regulations were not going to be as tough as was expected.
Suddenly, for-profit stocks began to rise and those hedge fund investors reached out to their friends in the Department of Education.
This is from an actual e-mail that my investigation uncovered.
It was sent from Steve Eisman, a hedge fund investor to David Bergeron, he was part of the team in charge of writing these regulations.
The e-mail reads: “I know you cannot respond, but FYI education stocks are running because people are hearing DOE is backing down on gainful employment.”
To translate, on Wall Street, the term “running” means that a stock is going up.
Within minutes this e-mail was marked high importance and forwarded to senior level political appointees. These appointees included James Kvaal, the Deputy Undersecretary and another policy expert at the Department and Phil Martin, the Secretary of Education’s confidential assistant.
To this day we do not know why the Department’s higher education policy experts needed to know that a hedge fund investor was losing money.
What we do know is that for-profit stocks dropped significantly and if you bet big that these stocks would drop, you likely made a lot of money.
When the Department of Education answered my questions, they admitted to my staff that this e-mail was not a proper contact.
In addition, the Department of Education’s Inspector General is investigating the gainful employment rulemaking process.
These are just two examples in two government agencies but reports like this are just the tip of the iceberg.
The more power Washington, DC has, the more it affects financial markets.
And the more it affects financial markets, the more people on Wall Street want to pay for information about what is going to happen in Washington, DC.
Usually, the only way any sort of ethics reform gets done around here is that someone gets caught.
With political intelligence we have the opportunity to create transparency before the next scandal happens.
As government grows, this industry is going to grow along with the potential for corruption.
The question is – what are we going to do about it?
Transparency is the simplest and least intrusive solution.
We can commission another study and kick the can down the road for another year or we can act.
This is our last chance to make sure that the Senate speaks with a unified voice against secrecy for political intelligence agents and for transparent government.
We must not allow special interests to operate in darkness.
For these reasons, and to support transparency, open government, and good government, I will oppose cloture on this bill.
If cloture is invoked, which is likely, I intend to vote for the bill. Although very flawed, at least it’s better than current law. But, it’s not much of a victory for the American people.
I yield the floor.
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