WASHINGTON – DFL Rep. Tim Walz took to the witness stand Wednesday to argue that his bill to ban insider trading by members of Congress is needed to restore the public’s faith in the battered institution.
Testifying before the House Financial Services Committee, Walz said he was surprised to learn about academic studies showing that stock portfolios of members of Congress regularly outpaced the market by 6 to 10 percent.
“Now that may be due to the infinite wisdom that resides in these halls or it could be something different,” Walz said. “Luck? Smart, savvy trading? Or the possibility that there was insider knowledge. I don’t know.’
Walz wouldn’t have been there testifying along with co-sponsors Louise Slaughter (D-NY) and Walter Jones (R-NC) had 60 Minutes not aired an exhaustive report on congressional insider trading allegations. That story included allegations that Rep. Spencer Bachus (R-AL), now chairman of the Financial Services Committee, had profited from stock trades in the days leading up to the 2008 financial crisis.
While congressional ethics rules currently prohibit members of Congress from using knowledge gleaned in their official capacity for profit, Walz’s bill, known as the STOCK Act, would apply federal insider trading laws to members of Congress.
Versions of the STOCK Act have been kicking around Capitol Hill for several years and Walz was not one of the bill’s original authors. But as public disapproval of the body has grown, Walz has adopted the legislation and become one its most forceful advocates.
“If you think a 9 percent approval rating is bad, don’t pass anything on this. Drag it out and don’t do anything and watch what happens,” Walz told the committee.
Before the 60 Minutes report aired last month, Walz’s bill had a half-dozen co-sponsors. By Wednesday, his office reported that 170 members of Congress, including Minnesota’s other three DFL representatives, had signed onto the bill.
In a sign that the GOP House leadership wants to clear the air around Congress, Bachus announced at the hearing that the bill would get a markup by the full committee, a key step that could enable the measure to get a vote by the entire House.