WASHINGTON — President Obama signed legislation Wednesday that bars insider trading by members of Congress and creates new financial disclosure requirements for thousands of executive branch employees.
Obama hailed the bipartisan measure as a step toward showing that members of Congress play by the same rules as everyone else, but he also said that more needs to be done.
"We were sent here to serve the American people and look out for their interests, not to look out for our own interests," Obama said in remarks at the White House. "So I'm very proud to sign this bill into law."
"There's obviously more that we can do to close the deficit of trust and limit the corrosive influence of money in politics," he added. "We should limit any elected official from owning stocks in industries that they have the power to impact. We should make sure people who bundle campaign contributions for Congress, can't lobby Congress, and vice versa."
The STOCK Act languished in Congress for years until late last year when "60 Minutes" aired a report that raised questions about whether certain members of Congress had used information they learned on the job for their own personal gain.
Among the members highlighted was House Financial Services Committee Chairman Spencer Bachus, who profited from trades he executed shortly after meeting with Federal Reserve Board Chairman Ben Bernanke near the height of the financial crisis in September 2008. The Alabama Republican has denied wrongdoing, and the matter is under investigation by the Office of Congressional Ethics.
Obama called on Congress to pass the legislation during his State of the Union address in January, which also helped trigger congressional action.
The Senate acted first, passing a bill that not only barred insider trading by members of Congress, but would also have required firms that sell information they gather on Capitol Hill to register as lobbyists. Those political intelligence firms often sell to hedge funds information they gather in private meetings with members of Congress and their staffers.
The House later passed its own version of the legislation, which did not include the provision about political intelligence firms, and the Senate eventually passed the House version.
The final measure clarifies that members of Congress and their staffers are not exempt from the insider trading prohibitions in securities laws, a matter about which there had been some dispute.
It also requires members of Congress, their staff, and a variety of executive branch employees to file reports after making trades of stock and bonds of $1,000 or more.
Groups that were pushing for a tougher version of the STOCK Act offered a mixed reaction to the law's enactment.
"This is a good bill — the most significant ethics achievement of the 112th Congress," Craig Holman, a lobbyist for the group Public Citizen, which describes itself as a champion of citizen interests, said in a press release. "But it could and should be stronger, and legislation is pending to strengthen it. Wall Street didn't want this, and Congress passed it only because they were shamed into it. Still, it is a good step."
The Sunlight Foundation, a group that advocates for greater openness in government, said the law is a step forward, but also called the final result disappointing in several respects.
The group's policy director, John Wonderlich, stated in a blog post that federal lobbying disclosure laws are evaded easily, and he lamented the decision by Congress not to rein in political intelligence firms.
"Our ethics and transparency laws deserve thoughtful, sustained attention," Wonderlich stated. "The STOCK Act process was more like a game of hot potato."
