Senator Scott Brown holds out the STOCK Act as a signature accomplishment. But a closer look finds the measure -- which had been drafted and filed years before Brown ever got to the U.S. Senate -- ultimately got watered down by Wall Street and some Capitol Hill insiders, with his seeming support.
During debate on the STOCK Act back in February, Brown voted against an amendment to require that so-called political intelligence consultants register their clients and contacts, much as lobbyists are already required to do (Senate vote #12, 2/2/2012). It's an issue most of us have never heard of, and the vote might seem like just an obscure sidelight to the overall bill and its more-talked-about purpose: cracking down on members of Congress who supposedly engage in insider trading. Yet the political intelligence provision stirred so much pushback from the investment industry and GOP leadership that it threatened to delay or even kill the whole bill.
According to an October 2011 Wall Street Journal report, "political intelligence" is a fast-growing field in which political insiders, like former Congressional aides and lobbyists, sell non-public information about pending legislation to hedge funds and investment houses. The Wall Street firms then trade on this inside information to enrich themselves at the expense of other investors. The industry reportedly grosses around $100 million a year and involves 2,000 people in Washington.
Congresswoman Louise Slaughter (D-NY), credited as the original author of the STOCK Act, who spent years trying to push it through Congress, has characterized registration and disclosure for political intelligence firms as a critical part of the STOCK Act. Rep. Slaughter has said "there is reason to believe some Members of Congress or their staff may have shared nonpublic information about current or upcoming Congressional activities with individuals outside of Congress working for political intelligence firms." A former ethics lawyer in the Bush White House recently told the Wall Street Journal that the industry amounts to "buying information from members of Congress in a perfectly legal way." Senator Charles Grassley, the Iowa Republican who sponsored the amendment Brown voted against, advocated for its importance in a Politico op-ed titled "Congress should not serve Wall Street."
Despite Brown's opposition, the political intelligence firm transparency measure was added to the Senate bill on a vote of 60-39. But it later died, thanks to fierce opposition from the hedge fund industry. According to the Sunlight Foundation: "bowing to pressures from Wall Street, Eric Cantor gutted the bill, stripping the political intelligence disclosure language from it before he would allow it to come to a vote." The Senate decided against insisting on its version and so the final legislation was watered down, known to some as The STOCK Act Lite.
Congresswoman Slaughter first introduced the STOCK Act back in 2006, but could barely attract any support. She and Rep. Tim Walz (D-MN) re-filed the measure in March 2011as H.R.1148; there was at that time no similar bill in the Senate. "[Slaughter] says, without a doubt, that it was the "60 Minutes" report that prompted the newfound interest," CBS News reported earlier this year. "I've never seen anything like it," she told the network. "The day after, on the street, people were asking about it." The 60 Minutes segment in question, which raised questions about whether various members had in fact traded stocks using inside knowledge, aired on November 13, 2011. As ProgressMass has pointed out, it was two days after this news report ran that Scott Brown first filed his STOCK Act (S. 1871) legislation for the very first time; Democrat Kirsten Gillibrand offered her own version (S. 1903) at about this time, too.
In April 2012, Brown issued a press release crowing: "President Obama Signs Sen. Scott Brown's STOCK Act in Law," but making no mention of Congresswoman Slaughter or her six-year battle. Senator Brown got an election year photo op with the president. Congresswoman Slaughter, by contrast, couldn't make the bill signing, thanks to a broken leg.