Frank presses Bachus to crack down on insider trading in Congress

Rep. Barney Frank (D-Mass.) is pressuring House Financial Services Committee Chairman Spencer Bachus (R-Ala.) to take up legislation preventing lawmakers from making financial moves based on non-public information — days after the chairman was publicly accused of engaging in such trading.

In a letter sent Wednesday, the ranking member of the panel urged Bachus to take up legislation blocking such trades, admitting it was overlooked when Frank ran the committee from 2007 until the beginning of the current Congress.

Frank wrote that the legislation should have been tackled while he was chairman, before Republicans took control of the House. He said that while he was focused on reforming the financial system via the Dodd-Frank reform law, he “neglected to act on a manner that I think is important in establishing confidence in our constituents.”

“I am still not sure that this is widespread, but given the attention that we have seen on this matter now, and given the importance of those whom we represent being fully assured that we are behaving appropriately, I think that we should now take up this legislation and, after suitable study, enact some version of it,” he wrote.

The request comes after a new book, as well as a “60 Minutes” report, explored whether lawmakers were reaping personal profits with information they obtained as members of Congress.

Bachus was among a handful of lawmakers singled out, alongside House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.), in both the book and the report, highlighting a number of moves that appeared as if they could have been motivated by private information.

For example, the book asserts that after meeting privately with such officials as Federal Reserve Chairman Ben Bernanke at the height of the financial crisis, Bachus made a trade that would show significant profits if the market fell, eventually nearly doubling his investment on the move.

Bachus responded to several of the book’s claims Wednesday, writing in a letter to its publisher that it was full of “serious untruths,” and that it was a “total lie” that he profited from non-public information. Bachus did not immediately respond to Frank’s letter.

The renewed spotlight on congressional trading has provided a boost of momentum to legislation introduced earlier this Congress by Reps. Louise Slaughter (D-N.Y.) and Tim Walz (D-Minn.) that would prohibit members and White House employees from trading on private information, or providing private information to “political intelligence” firms.

Similar bills are being introduced by Sens. Scott Brown (R-Mass.) and Kirsten Gillibrand (D-N.Y.), and the Senate Homeland Security and Governmental Affairs Committee will be exploring potential insider trading in an upcoming hearing.