Nov. 17 Daily News Editorial
One year removed from completing six terms in the U.S. House of Representatives, former 3rd District Rep. Brian Baird may have discovered a secret for getting things done in the Nation's Capital:
Use a public forum to embarrass someone, particularly someone big and important.
Baird was a longstanding proponent of a measure he called the STOCK Act — an acronym for "Stop Trading on Congressional Knowledge." If enacted, the bill would prevent members of Congress and their staffs from using information not available to the public to guide them in making or selling investments. This sort of "insider trading" is patently illegal for most Americans, but the prohibition has never been extended to Capitol Hill.
As a congressman, Baird was always a sheriff in search of a posse on this issue. Even though he took to introducing the STOCK Act in every session of Congress, no more than six other House members ever signed on as co-sponsors.
As a retired congressman, Baird finally had his day in the famous Court of Public Opinion. CBS Television's "60 Minutes" took up the story and Baird was a willing interview. In a broadcast Sunday night, Baird helped outline the nature and possible extent of the problem and CBS reporters identified former House Speaker Nancy Pelosi and current Speaker John Boehner as persons who'd used insider information to their financial advantage. CBS was following an initial investigation by Peter Schweitzer, author of a recent book detailing many of the techniques used by members of Congress to enhance their incomes.
Pelosi and Boehner have denied acting improperly, but the system certainly appears to have been one ripe for abuse.
"There was one night when we had a late, late night caucus and you could kind of tell how a vote was going to go the next day," Baird told CBS. "I literally walked home and I thought, ‘Man, if you ... went online and made some significant trades, you could make a lot of money on this.'"
Studies led by Georgia State University Professor Alan Ziobrowski found that stock portfolios of senators beat the market by 12 percent annually, while those of House members did so by about 6 percent. Ziobrowski called such returns abnormally high.
Laws against insider trading are an important defense of the integrity of our stock and bond markets. When they go unenforced, suspicion builds that our securities exchanges aren't much more than places where investors employing conventional strategies are cows to be milked by those in the inner circle.
We have difficulty coming up with a reason anyone in Congress would have opposed STOCK at any time. The measure gained no traction, however, until Schweitzer's book and "60 Minutes" (with Baird lending credibility) highlighted the issue and put two big names front and center.
In just a few days, this year's version of the STOCK Act has collected numerous new advocates, among them Jaime Herrera Beutler, Baird's first-term successor. Its chances of enactment have gone from "nil" to "promising."
"There's no place for insider trading in this country — not on Wall Street, and most certainly not in Congress," Herrera Beutler said Tuesday.
She's got a point there — a point that was just as valid 10 (or 20, or 50) years ago as it is today.