Tim Walz's bill to ban federal lawmakers from using inside information when managing their own financial portfolios is getting fast-tracked through Congress.
The fact that Walz introduced a piece of legislation popular on both sides of the aisle could be a boon to his reelection chances. Two weeks ago, the Democratic Congressional Campaign Committee identified the Mankato Democrat as one of the 20 most vulnerable incumbents this year.
[jump] While the STOCK act has been kicked around Congress in one form or another for almost a decade, momentum to pass the legislation got a boost last November when a CBS 60 Minutes special built a persuasive case that prominent legislators on both sides of the aisle commonly rely on inside information to reap windfalls. Video of the CBS report is embedded at bottom.
Furthermore, a recent study by investment advisers at The Motley Fool shows that in the weeks prior to the signing of TARP in early October 2008, members of Congress made a total of 318 trades in financial companies, compared to 115 trades made in the same period a year prior. The 2008 trades amounted to $6.7 million in financial-company shares -- $5 million more than 2007.
The practice isn't technically illegal, but that would change if Walz's bill becomes law. President Obama, for his part, told lawmakers during the State of the Union to "send me a bill that bans insider trading by members of Congress. I will sign it tomorrow." It appears a bill of that sort will reach his desk before February is through.
In an interview with Daily Finance, Walz framed the need for the STOCK act as follows:
How do we know, if I know a highway bill is coming, that I'm not investing in asphalt equipment? That's the question that gets brought up here... Whether that is happening or not, the perception is just as damaging. It's exactly the same thing as if they were doing it, if the public believes they are. Perception is reality.Walz shocked 12-year Republican incumbent Gil Gutknect in 2006, then won reelection in 2008 and '10. He now faces a strong November challenge from Minnesota Senator Mike Parry, R-Waseca, for his 1st district seat.
For Walz, whether support for the popular STOCK act bolsters his reelection chances remains to be seen. But either way, closing loopholes that allow Congress members to benefit from unfair financial practices is clearly good politics no matter which side of the aisle you're on.
Here's the compelling 60 Minutes report: