Are Members of Congress using inside information gathered as part of their jobs to make financial investments (and get rich...er?) That question is at the heart of yesterday's 60 Minutes report. Reporter Steve Kroft accused current House Speaker John Boehner and former speakers Nancy Pelosi and Dennis Hastert, among others, of engaging in a legal form of insider trading. (We first broke the Hastert story in 2006.) What the story didn't explore was how transparency aided Hoover Institution research fellow Peter Schweizer in drawing these connections, and how better transparency would deter problems from arising.
Schweizer's analysis drew upon congressional financial disclosure reports, one of many ethics-related documents that the House and Senate make available to the public. While all these documents should be available online, in real-time, and in machine-readable formats, most are not.* Usually, members of the public must physically travel to the House or Senate and print out ethics documents, one page at a time -- you will not be provided an electronic copy, no matter how much you ask, even though the documents are already digitized. In fact, we compiled the first public list of all the "publicly-available" documents from the House and Senate, with information about how to obtain the reports and what they contain. We also called for the GAO to finally live up to its statutory obligation to review whether the personal financial disclosure forms should be updated.
Looking at the financial disclosure reports, only the House publishes them online; the Senate archaically requires you to go to the Senate in person to ask for this information. If you want to analyze the Senate's financial disclosure reports, you have to re-key the data into a computer by hand; there's no database to facilitate analysis. This is equally true if you want to see which Member or senior staffer has been promised a plum job by an outside company, foreign travel expense reports, legal defense fund contributions, and more. If you're not in Washington, you'd better be willing to book a plane ride to DC; otherwise, you're out of luck.
We won't know how much effort it took to make the connection between congressional activity and investing, which formed the basis of the 60 Minutes report and Schweizer's well-timed book "Throw Them All Out," but it likely was considerable. Without better data, it is hard to tell who actually benefited from trading on inside information. We also don't know the extent to which investors mine data from capitol hill about industry activities to help make investment decisions, and we can't know that until legislation like the STOCK Act (which we wrote about here) becomes law.
But what we do know is that the House and Senate can do much more to be transparent. They need to make it easier for the public to see who is trying to influence them, how they behave while in office, and the work that they're doing. That's why we are advocating for lobbying reform, ethics reform, and a lot more Sunlight on the process.
Update 1: These documents are not available online from the House or Senate, but some third parties, such as the Center for Responsive Politics and Legistorm, have digitized many of the documents. However, it's not always possible to access the data in bulk, and it is possible that the third parties introduced errors in the digitization process.
Update 2: I should also mention that Sunlight gave a grant to CRP for digitization of the personal financial disclosure forms, travel disclosures, and other documents in 2007.