According to an article in today’s Washington Post, the number of lawmakers owning and trading stocks has nearly tripled since 2001. This brings with it a concern that personal financial conflicts of interest may interfere with the honest legislating the public expects from their representatives or appear to to the general public, lessening trust in an institution that is hardly held in high-regard.
You can read the whole Post article to hear about the various stories of lawmakers owning stocks and taking positions that would support their bottom line. I’m going to focus on the underlying disclosure issues that are brought up from this problem.
As has been reported here and at Real Time Investigations, personal financial disclosures for lawmakers are wholly inadequate, particularly in reference to stock trading. As the Post article notes, “The congressional financial disclosure system, an annual form filled out and policed by members of Congress, is supposed to help keep lawmakers honest and reassure the public by making stock holdings transparent. But the reporting is delayed, information is limited and the paper forms prevent the computer analysis of trading that is commonplace elsewhere.”
Financial disclosure forms are filed annually. There is no way to police a practice when the reporting is this rare. There is also no reason that the reporting could not be in real time. All of this information is reported in real time to the Securities and Exchange Commission (SEC). Stock sales, purchases and trades could easily be reported in real time to the Clerk of the House or the Secretary of the Senate and publicly disclosed in a delayed fashion so as not to directly affect the daily trading on the exchanges or futures markets.
Rep. Brian Baird sponsored a bill that would begin to move the disclosure train in the right direction. The Stop Trading on Congress Knowledge Act (H.R. 682) — please forgive the mortifying acronym — would require lawmakers to disclose to either the Clerk of the House or Secretary of the Senate all stock activity within 90 days of taking action. The bill would also require those trading intelligence to lawmakers on financial matters to register and disclose their activities under the Lobbying Disclosure Act of 1995.
Baird’s bill looks like a good vehicle to move disclosure in the right direction, not only on financial disclosure, but also on lobbying disclosure. I’m going to go into the bill and relevant sections to check what it will change and how that could move lobbying disclosure down the road a little more.