Obama called for such a bill during his State of the Union address two months ago. After difficulties with a bill drafted by the Senate, which didn’t garner enough votes, Majority Leader Harry Reid accepted the weaker bill written by the House. The senate approved it in a vote of 96 to 3, after the House had approved it last month with a vote of 417 to 3.
The bill, called the Stop Trading on Congressional Knowledge Act, or STOCK Act, is meant to redress possible abuses by congressman and other government officials who could use privileged information gained by their government position to anticipate the market to create hedge funds, mutual funds, and other such investments.
Rep. Spence Bachus, R-Ala., for instance, is being investigated for making three dozen trades just prior to the 2008 financial collapse and the $700 billion economic bailout passed by congress. Bachus denies using inside information, and has in fact lost $19,490 through his trading.
Senator Joseph Lieberman called the bill “the most significant Congressional ethics legislation we’ve seen adopted in at least five years.”
Critics note that the bill was approved only after being somewhat crippled from its original form, and just in time for congressional reelections. Their public approval ratings are exceptionally low lately, ranging from 12 to 19 per cent.
The bill will orchestrate a regular look at the financial transactions of government officials, and requires congress to post online notification after 30 days of a transaction. The bill also prohibits members of congress from trading stock and other securities using inside information.
Senator Susan Collins, R-Maine, who helped draft the bill, explains that “At a time when public confidence is at an all-time low, we must remove any doubt that the law and rules against insider trading apply to members of Congress.”