In a knee-jerk reaction to concerns that too many people may be required to disclose personal financial data, Congress quickly and quietly approved legislation over the past 24 hours to repeal major portions of disclosure requirements designed to ensure enforcement of the nation's new law against congressional insider trading. President Barack Obama should veto this bad bill, and lawmakers should go back to the drawing board.
Lawmakers should have taken a more reasoned approach and approved a temporary suspension of the disclosure requirement for certain executive branch personnel, rather than an outright repeal. That way Congress could take the time to scrutinize the issue carefully and decide on changes to the congressional insider trading law that would allow for both personal privacy and enough transparency to limit conflicts of interest.
After years of inaction, Congress was finally compelled by public pressure last year to apply laws to itself against insider trading in the stock markets. The "Stop Trading on Congressional Knowledge" STOCK Act made congressional insider trading illegal and imposed online disclosure of personal financial activity by Congress and the executive branch so that compliance to the law could be monitored. Without this disclosure, the law will be difficult to enforce.
The STOCK Act mandated disclosure by approximately 28,000 executive branch employees, many not even senior-level employees, and Public Citizen agrees that this level of coverage may have reached too far. In response, we have asked Congress to consider appropriate remedies to change the scope somewhat to apply to appropriate senior-level executive branch employees.
Instead of this more sensible action, lawmakers hastily repealed disclosure for all but presidential appointees and members of Congress. The repeal (S. 716) even covers congressional staff, in an action that is both extreme and crippling to the STOCK Act's enforcement mechanism. Unlike most executive branch personnel, congressional staffers have no conflict-of-interest restrictions on stock market investments.
Gutting a popular and much-needed law is unconscionable. Obama should veto this measure, and lawmakers instead should temporarily delay implementation of the disclosure provision for executive branch personnel below presidential appointees. Such a delay would provide Congress with an opportunity to scrutinize the issue more closely and offer more appropriate remedies.