[Cross-posted on Blue Mass Group.]
Our Republican junior Senator, Scott Brown, is very quick to pat himself on the back as the STOCK Act - prohibiting members of Congress and their staffs from buying and selling stock based on insider information - appears poised to become law:
Brown readily took credit for passage of the so-called STOCK Act, which was approved on a 96-3 vote. [...]
Brown had introduced his version of the bill in the Senate after a "60 Minutes" broadcast in November reporting on members of Congress apparently profiting financially from non-public information obtained through their dealings on Capitol Hill.
However, he might want to hold off on his victory lap before the facts get in the way. Never mind the fact that, as this Boston Globe article mentions, it wasn't Scott Brown's version of the STOCK Act (or any other Senate version of the STOCK Act, of which there were several) that was passed, but rather the House version that was passed.
Rather, there are two significant reasons that the STOCK Act actually represents Scott Brown's absence of leadership.
The first reason is timing. Scott Brown introduced his version of the STOCK Act after the "60 Minutes" exposé brought the issue to the public forefront. But was that "60 Minutes" story the first time Brown learned about the practice? Not according to a key Brown insider: Scott Brown himself. Scott Brown's own YouTube page features an interview he did with the Fox News morning show "Fox & Friends" on November 17, 2011. Co-host Gretchen Carlson's first question and Brown's response are quite enlightening:
Carlson: I imagine since you are a freshman Senator that you can say that you did not know about this. Did you know that members of Congress had the ability to use insider information to get rich?
Brown: Certainly not when I got here. It's something we have been aware of since July, and then obviously the recent ["60 Minutes"] piece brought it to the forefront.
The takeaway from this exchange is that Scott Brown became aware of Congressional stock trading on insider information in July, but didn't do anything about it for four months until "60 Minutes" "brought it to the forefront" and gave Brown an opportunity to get on the soapbox. If Brown wanted to display actual leadership on the issue, he would have proposed legislation to curtail the practice back in July, when he admits he first became aware of the practice, not in November, only after "60 Minutes" made it a high-profile issue.
Further into the same "Fox & Friends" interview, Scott Brown shared another interesting quote:
People shouldn't be coming here, as you referenced, to- in lining their pockets through some type of insider information that enables them to actually take advantage of stock opportunities. It's just wrong.
This brings us to the second, and more important, reason that the STOCK Act actually represents Scott Brown's absence of leadership: substance, or, more specifically, self-interested loopholes.
In the Fox & Friends interview, Brown said it was "wrong" for Congressional members and staff to profit financially from the stock market due to their positions in Washington. However, Brown's version of the STOCK Act would have allowed Scott Brown himself to continue doing just that through convenient loopholes:
Sen. Scott Brown (R-Mass.) positioned himself as a clean-government advocate this week, co-sponsoring the STOCK Act, which is designed to halt insider trading-like activity by members of Congress.
But Brown's financial disclosure records show that he has been a large investor in Bank of America, GE and Exxon-Mobil throughout his time in the Senate -- even as he secured lucrative legislative protections for the nation's biggest banks, trading houses and oil companies.
What's more, under Brown's new good-government legislation, this type of activity would still be permitted.
While Scott Brown's bill would have prevented some Congressional insider trading, it would have allowed Brown's own enrichment to continue unabated. How much money does Scott Brown have invested in these companies?
According to personal financial disclosure records from 2009 and 2010, Senator Brown has owned up to $50,000 of stock in Bank of America, which received $45 billion of federal money from the Troubled Asset Relief Program, the government bailout program. He also owns up to $100,000 in General Electric stock, which issued over $70 billion in debt guaranteed by the American government during the financial crisis while its massive banking wing shuddered on its subprime mortgage bets.
But during the final phase of last year's debate over Wall Street reform legislation, Brown demanded critical breaks for big banks as the price of his support, which was critical for the bills [sic] passage.
Those breaks included the elimination of a costly tax on too-big-to-fail banks and a special exemption in risky securities trading for the nation's largest banks. [...]
Brown, who owns up to $50,000 of Exxon Mobil stock according to financial filings, also voted against ending federal subsidies for oil companies earlier in 2011.
Scott Brown has tens of thousands of dollars invested in Bank of America, General Electric, and Exxon Mobil, and he just happens to be legislating to these companies' benefits and effectively voting on their behalf. And Brown's version of the STOCK Act would do nothing to prevent him from strengthening the value of his own stock portfolio through his role as a U.S. Senator:
But this type of activity would not actually be curbed by Brown's STOCK Act, because the legislation only deals with active trading -- members of Congress who buy and sell stocks based on nonpublic political information pertaining to specific companies.
Since Brown has been a longtime shareholder in all three companies, any legislative efforts that boosted the value of those stocks would not run afoul of the new rules included in his bill. A spokesman for Brown agreed that the bill would not curb members of Congress from voting on provisions that affect companies they have a stake in.
So what's the bottom line as far as Scott Brown and the STOCK Act are concerned? Brown learned about the insider trading practice in July. He didn't do anything about the practice for four months, until "60 Minutes" made it a hot button issue. And, even then, his version of the response legislation was riddled with loopholes that would allow him to continue to use his position as a U.S. Senator to increase the value of his own stock portfolio! After all of that, it's not even his legislation that gets passed. And now he's taking a victory lap?
This isn't how a leader should comport himself or herself. This isn't how an "independent voice" should legislate. Ultimately, the STOCK Act does not represent a Scott Brown legislative victory. Rather, it represents Scott Brown's absence of leadership.