Reid holds congressional insider trading bill’s future in his hands

Popular legislation designed to prevent congressional insider trading has been idling for weeks as strange political dynamics complicate Sen. Harry Reid’s (D-Nev.) decision on a path forward.

Moving the STOCK Act wasn’t supposed to be complicated, but differences over a key section of the bill on political intelligence have created unusual political alliances and left supporters waiting anxiously for Reid to act.

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On one side stand House Minority Leader Nancy Pelosi (D-Calif.), Rep. Louise Slaughter (D-N.Y.) and other House Democrats, who have an unusual ally in conservative Iowa GOP Sen. Chuck Grassley.

Grassley and the House Democrats want a conference where they could push for stronger language requiring disclosure rules for the fast-growing “political intelligence” industry, which provides valuable policy information to hedge funds and other well-heeled interests, usually on Wall Street.

But GOP leaders in both chambers and Democratic leaders in the Senate oppose Grassley’s language as an overreach.

Majority Leader Eric Cantor (R-Va.) clipped the provision from the House bill, while Reid and the other leading upper-chamber Democrats — Sens. Dick Durbin (Ill.) and Charles Schumer (N.Y.) — voted against Grassley’s measure.

Despite the opposition, Grassley’s language still squeaked by in a 60-39 vote, and the final Senate bill containing Grassley’s measure was approved in a broad bipartisan vote.

Given Reid’s opposition to the Grassley language — perhaps the greatest difference between the House and Senate bills — there’s reason to think he’d rather move the House bill than appoint a conference committee.

All sides agree that Reid holds the keys. But the majority leader — whose office declined to comment for this story — so far isn't playing his hand.

"The ball is in Reid's court," Craig Holman, government affairs lobbyist for Public Citizen, said Thursday. "Everyone is waiting for Reid to make a decision."

Aside from going to conference, Reid could choose to narrow the scope of the political intelligence provision and "ping-pong" that bill back to the House. Or he could take up the House bill as it stands — a move opposed by those who want some version of the Grassley amendment, among other Senate provisions, tacked on.

Grassley, for his part, says he's ready to tweak his amendment to secure its passage.

"I’m willing to address any concerns about the political intelligence provision being too broad and modify the language as needed," the Iowa Republican said Thursday in an email. "The differences between the two bills don’t seem that fundamental. It’s surprising there’s no path forward."

Grassley said he's open to making the changes in conference or by bouncing bills between the chambers until there's a deal. In either case, he added, "the Senate majority leader [Reid] has the responsibility to set the next step in motion."

Senate GOP Leader Mitch McConnell (Ky.) is complicating Reid’s choice with a threat to filibuster the process of naming conferees, according to sources familiar with the negotiations. Such a move would delay the conference negotiations, but likely wouldn't kill the bill, which passed overwhelmingly on its first trip through the Senate last month.

McConnell's office did not respond to a request for comment Thursday.

Meanwhile, House leaders in both parties are in limbo and pointing figures, with Republicans wondering when — or even if — Reid will begin conference procedures, and Democrats accusing Speaker John Boehner (R-Ohio) of stalling by not setting the ratio of lower-chamber members on the panel.

"It’s time for Speaker Boehner [to] appoint conferees," a senior Democratic aide said in an email.

The aide characterized the political intelligence provision as "very important" to House Democrats, but declined to weigh in on whether the absence of that language would be a deal-breaker.

Boehner's office declined to comment for this story.

Just a few months ago, it appeared a final bill would sail to President Obama’s desk.

Stung by a November "60 Minutes" report suggesting several top lawmakers had profited from insider knowledge, party leaders united in a rare show of urgency and cooperation to usher the legislation through both chambers — a high-profile demonstration that Congress, however divided and unpopular, can still come together for the sake of transparency and good government.

The report targeted Boehner, Pelosi and House Financial Services Committee Chairman Spencer Bachus (R-Ala.). All three denied wrongdoing. The Office of Congressional Ethics has since launched an investigation into Bachus's trading activities.

Current law prevents insider trading on non-public information gleaned through corporate channels, but the law is much less clear when it comes to whether federal regulators have similar powers to sanction trades made on non-public information obtained through government channels.

Both versions of the STOCK Act would explicitly bar lawmakers and their staffs from using insider knowledge culled from their everyday duties on Capitol Hill to trade in stocks, bonds and commodities markets.

The Senate vote on final passage was 96-3. In the House, the tally was 417-2.

Obama has said he'll sign the bill when it hits his desk. The question remains when.

This story was updated at 12:08 p.m. to reflect that Bachus is under investigation by the Office of Congressional Ethics, not the House Ethics Committee.

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