A bill to close a loophole that allows members of Congress to use inside information to trade in stocks had been picking up steam, but has now hit a roadblock.
The 1st District DFL Rep. Tim Walz-sponsored STOCK Act — Stop Trading in Congressional Knowledge — has been around for six years, but just recently started getting attention. It had been going nowhere until a "60 Minutes" report in November.
"We know that during the health care debate, people were trading health care stocks. We know that during the financial crisis of 2008, they were getting out of the market before the rest of America really knew what was going on," Peter Schweizer, a fellow at the conservative Hoover Institution said on "60 Minutes."
Overnight, the bill went from a handful of co-sponsors to having dozens. A month later, the bill has more than 220 co-sponsors from both parties, but mostly from the House. All four of Minnesota's DFL House members back the bill.
Rep. Erik Paulsen is the sole Minnesota Republican to co-sponsor the bill.
"When Congress is in such dismal approval ratings, we have to give them the confidence to let our constituents know that we have to be held to high standards," Paulsen said.
This past Tuesday the bill received a favorable hearing in the House Financial Services Committee. That committee is chaired by Rep. Spencer Bachus, R-Ala., who is one of the members whose trading habits was singled out in the "60 Minutes" report.
At the hearing, Bachus promised Walz and the bill's other main sponsors, Rep. Louise Slaughter, D-NY and Rep. Walter Jones, R-N.C. that the STOCK Act would get a hearing next week, the final step before it headed to the House floor.
But late Wednesday night, Bachus issued a press release saying the hearing is being indefinitely postponed, to Walz's disappointment.
"Everything was going exactly the way the American public would like to believe our democracy is supposed to work and it all came to a screeching stop," Walz said.
According to Politico, Bachus was confronted by House Majority Leader Eric Cantor who was reportedly upset that Bachus didn't clear his decision with other Republican leaders. Cantor's office said they were acting at the request of other members who feared the STOCK Act was flawed and moving too hastily through Congress.
That prompted a reaction from Walz's Republican ally on this bill, Walter Jones of North Carolina.
"I believe sincerely if the public saw how petty some — not all — but some around this House of Representatives, they would be even further disgusted," Jones said.
Neither Cantor nor Bachus have offered further explanation for the decision. But Rep. Chip Cravaack, R-Minn., said he has some problems with the bill.
"There is a constitutionality that I am concerned with in regards to having a political appointee in charge of enforcement," Cravaack said.
In other words, the president appoints the commissioners of the Securities and Exchange Commission, the same agency that would enforce the insider trading laws against members of Congress.
Cravaack fears the bill as written could be used for partisan witch hunts by both parties.
"We all want to make sure that those that are truly breaking the law or bending the law are penalized but we have to do it properly," Cravaack said.
Walz would like suggestions to improve the bill. He said a final hearing during which legislation is amended would be a perfect venue to address those concerns.
With the STOCK Act again in legislative limbo, Walz said he fears constituents will lose even more faith in Congress.
"That 10 percent approval rating, go back home if this thing doesn't move and doesn't happen," Walz said. "Hepatitis will be more popular than the U.S. Congress, I can guarantee you that."
While the STOCK Act's fortunes appear to have dimmed in the House, they're brighter in the Senate. A Senate committee appears set to pass a newly-introduced version of Walz's bill by the end of next week.