More often than not Congress needs to be saved from itself. A classic example is the STOCK Act which passed the U.S. Senate last week and comes up for a vote in the House of Representatives later this week.
The sentiment behind the legislation is noble and worthwhile. The full name of the bill -- Stop Trading on Congressional Knowledge Act – underscores the problem the legislation is attempting to solve. Members of Congress have been buying and selling stocks with inside information only they have been privy to. Thus they have had an unfair advantage over the general public when it comes to both money-making opportunities or warnings of a downturn.
The revelation about congressional insider trading practices came with the release of an explosive bestselling book titled Throw Them All Out, authored by Peter Schweizer. The book was launched on a segment of CBS 60 Minutes, and featured a House Press Gallery confrontation between 60 Minutes correspondent Steve Kroft and House Minority Leader (and former Speaker) Nancy Pelosi (D-CA) as he grilled her about a possible conflict of interest.
But with public outcry and momentum behind any initiative taken by Congress often comes an overreach by Members of Congress themselves. In this case, Sen. Chuck Grassley (R-IA) has done a disservice to the public by pushing an amendment to the STOCK Act that actually mocks the original bill itself.
Grassley’s amendment – which is in the Senate bill passed last week – would force information consultants and financial advisers to register as lobbyists, even though they simply gather and share info about potential legislation regarding finances or financial services, as opposed to trying to influence a Member of Congress to vote yea or nay on a particular bill. Grassley’s amendment would create a massive new class of registered lobbyists out of people who don’t even lobby.
This would be a large, unnecessary and very expensive expansion of government regulation that would create a massive bureaucratic nightmare. It would also do nothing to keep Members of Congress, or their staffers, from trading on inside information.
Suppose an information consultant, hired by Wells Fargo or Merrill Lynch, talks to his or her contacts on Capitol Hill and then does a memo about the financial impact of a potential bill. The company, in turn, sends the memo to thousands of financial advisers all across America or hosts them on a conference call to relay the information. Under Grassley’s amendment, all involved would have to register as lobbyists.
Given how many financial services companies regularly gather and share such information, the sheer number of people who would have to register is prodigious. Who is going to register all these people? Who is going to monitor and track their activities? A large government agency would have to be expanded and staffed with more government bureaucrats, or a new agency with its own bureaucrats would have to be created
Not only are there First Amendment issues raised by this amendment but those who don’t register as lobbyists could face civil or criminal penalties, as pointed out by Sen. Joe Lieberman (I-CT) who raised serious questions about enforcing the amendment on the Senate floor in a debate with Grassley.
Should Members of Congress be forbidden to buy and sell stocks based on inside information? Yes. Can Congress police itself without overreaching and creating even more bureaucratic regulations funded by more money we don’t have? Yes. The House passed the STOCK Act without the Grassley amendment and make sure the final bill, negotiated with the Senate, doesn’t contain it either.
This article originally appeared on Fox News.