House Financial Services Committee Chairman Spencer Bachus (R-Ala.) has proposed legislation that would require all members of Congress to place all their stocks, bonds and other securities into a blind trust that would be managed without their consent as long as they are members.
"While laws that prohibit insider trading already apply to Congress, this bill sets a higher standard of public service," Bachus said. "It is an extra step that will strengthen accountability and, hopefully, the public's trust that no representative or senator benefits financially from non-public information."
That "60 Minutes" story said Bachus made trades soon after 2008 briefings about the financial meltdown with then-Treasury Secretary Henry Paulson. Bachus has denied these charges, which were first set out in a book titled "Throw Them All Out," and said in a letter to the publisher of that book that he has never traded stocks based on nonpublic information.
In one example, Bachus argued that while the book and "60 Minutes" said he profited from betting that GE stock would tank, he actually bought call options on GE, a bet the stock would rise.
The Bachus bill, if passed, would require all active members to place their holdings in a blind trust within 30 days. It would also prohibit the trustee from consulting with or revealing investment decisions to active members.
His bill is different from one continuing to gain co-sponsors, the Stop Trading on Congressional Knowledge (STOCK) Act. That bill, from Rep. Tim Walz (D-Minn.), would require the Securities and Exchange Commission and Commodity Futures Trading Commission (CFTC) to set out rules prohibiting the purchase of securities with nonpublic information either from Congress or because the trader is a member or staff.
The Stock Act has 153 co-sponsors; almost all of those sponsors joined the bill after the "60 Minutes" report.