U.S. Rep. Jaime Herrera Beutler announced Tuesday that she’ll cosponsor a bill to ban insider trading by members of Congress — two days after efforts by her predecessor, former U.S. Rep. Brian Baird, to pass a similar bill were featured on CBS’s "60 Minutes."
“Brian Baird deserves a lot of credit for highlighting this needed reform — both as a member of Congress, and recently as a regular citizen,” Herrera Beutler, R-Camas, said in a statement. “There’s no place for insider trading in this country — not on Wall Street, and most certainly not in Congress. We’ve all seen the fallout when folks in privileged positions put their own profit above ethics. I hope we pass this bill to ensure Congress keeps its focus on serving the public good.”
“I’m glad it’s gotten some attention at last and I think it would behoove leadership to just bring it up and pass it,” Baird said in a phone interview. “It’s already had a hearing several years ago. We’re not asking anything in the bill that we don’t ask of the general public."
The current version of the STOCK Act (Stop Trading on Congressional Knowledge) was introduced March 17 by Rep. Timothy Walz, D-Minn., referred to a series of House committees, and reintroduced June 1. To date, it has not received a hearing.
As of Tuesday the bill had 19 sponsors from both parties, not including Herrera Beutler. Of those, 11 signed on as cosponsors Monday after the 60 Minutes piece aired.
The STOCK Act would prohibit members of Congress, their employees, and Executive Branch staff members from profiting from nonpublic information they obtain through their positions. They would be prohibited from buying or selling securities, swaps, or commodity futures based on nonpublic information they obtain through their jobs; prohibited from sharing non-public information about legislative action for purposes of investing or profiting from investment; and required to report investment transactions valued in excess of $1,000.
The bill also requires agencies specializing in political intelligence that get information directly from Congress to register with the House and Senate, similar to lobbying organizations.
Baird, a six-term Washington Democrat who decided not to run for re-election last year, was featured in the CBS News show’s report on insider trading by members of Congress acting on advance knowledge of marketmoving legislation or private government briefings.
Baird, who now lives in Edmonds, told correspondent Steve Kroft that lawmakers and their aides are routinely privy to nonpublic information they could legally cash in for big profits.
"One line in a bill in Congress can be worth millions and millions of dollars,” Baird said. “There was one night we had a late, latenight caucus and you could kind of tell how a vote was going to go the next day. I literally walked home and I thought, ‘Man, if you, if you went online and made some significant trades, you could make a lot of money on this.’”
Members of Congress can get away with financial transactions that would be considered criminal for almost anyone else. For instance, lawmakers can buy or sell stocks in insurers, banks or defense contractors even while working on legislation that could materially affect those industries.
Four times since 2004, Baird introduced a bill to make those transactions illegal for members of Congress and other federal employees.
In an interview Monday, Baird said it shocked him to hear fellow lawmakers dismiss his bill as a needless fix for a nonexistent problem.
But Baird said he knew better. “In a town where information is currency, there was no clear legal prohibition against (insider trading), and no one was tracking it,” he said. “It was very likely that some people were taking advantage of it.”
Kroft reported that House Speaker John Boehner, R-Ohio, made money trading health-care stock during the 2009 health-reform debate.
Rep. Spencer Bachus, R-Ala., the chairman of the House Financial Services Committee, profitably bet that the stock market would drop after attending a private briefing in September 2008 by then-Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke about the impending financial meltdown.
Bachus and Boehner both denied they had acted on nonpublic information.
Lawmakers enjoy other financial advantages, too. Former House Speaker Nancy Pelosi, D-Calif., and her husband have bought stock in eight companies that went public. One of them was the credit-card giant Visa.
Pelosi purchased 5,000 shares at the initial public offering price of $44 a share, which two days later climbed to $64 a share. Pelosi’s stock buy was perfectly legal.
Baird said members of Congress who unjustly enrich themselves undermine public trust.
Known for his sometimes obstinate independence, Baird admitted to leaving Congress feeling somewhat disenchanted. He recently published his third book, “Character, Politics & Responsibility: Restarting the Heart of the American Republic,” as an antidote to what he sees as politics driven by partisan rancor and special interests.
After a stint as a stay-at-home dad to his 6-year-old twin sons, Baird took a job in August as senior vice president of government affairs at Vigor Industrial (formerly Todd Shipyards). Baird said he has no interest in returning to Congress anytime soon. But he wouldn’t rule out serving again.
“I cherish the institution,” Baird said. “People who abuse power undermine the institution. And that’s a dangerous thing."