Stop Trading on Congressional Knowledge Act

Floor Speech

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Mr. COBURN. Mr. President, as my colleagues are no doubt aware, I stand in opposition to this bill, not because I think we should have insider trading. As a physician I am trained to fix the real problem and you are treating the symptoms. Several months ago, CBS did a series and showed some questionable, not necessarily insider trading, stock transactions, which, given the low level of confidence by the American public in this institution, have raised the question: What about insider trading?

I honestly believe everyone in our body is never going to use insider trading to advantage themselves over the best interests of our country. But the real problem is the confidence in the Congress to do what is in the best long-term interest of the country. The reason the confidence is not there doesn't have anything to do with insider trading as we would normally think about it. It has to do with insider trading that we do not normally think about, as to how we sell a vote to get something else on the next vote, how we trade a position, how we saw positions were bought and sold on the health care bill. Whether it be the Cornhusker Kickback or the Florida Gator-aid, whatever it was, the fact is the American people saw behavior of Members of Congress doing things that were politically expedient rather than what is in the long-term best interest of our country. That is the real insider trading scandal we ought to be addressing.

How do we do that? The way we address that is bring to the floor bills that actually address the problems our country is having today. Every second of every day this year our Government will spend $121,000. We will borrow $52,000 a second every day. We are not addressing any of that in the Senate. We did not all last year and we are not this year. The real problem in front of our country is America does not see a Congress that is willing to address the real issues and make the hard choices.

Hard choices are coming. We will make those choices ultimately. Some of us will not be here. But the longer we delay in making those very difficult choices--such as saving Medicare, such as saving Social Security, such as reforming the Tax Code to stimulate economic activity and create job opportunities for Americans--that is what they want us doing.

The other thing I will mention is I was one of two people who voted against the last ethics law. I ask my colleagues, did we improve the Senate with the last ethics law? Will we improve the quality of representation with this law? I do not think so. I think what we are doing is playing a political game to say we are all guilty, now we have to prove that we are not. That is not what our system of law is built on. Our system of law is built on the fact innocent until we are proven guilty.

The assumption that the Senate is undertaking now is that some of our colleagues are doing insider trading on the stock market. Nothing could be further from the truth. The real insider trading is the horse-trading that goes on in this body that is not always in the best interest of the country. This legislation is not about to earn back the trust of the American people.

The SEC and the Ethics Committee already have the power to investigate inside trading abuses. Yearly we fill out a report saying: Let's deem every trade we have made. If it is true what the chairman of the committee said that what the SEC would like to do is have it more refined so they can have better access, then that ought to be the bill we bring forward. We ought to bring forward a bill that says: No. 1, we are under the laws of the SEC, section 10b, and we are. We don't hear that said anywhere, but we are. If our intent is to bring forward a bill to fix the potential for insider trading, then that is what we ought to be doing. But the assumption we are guilty first and have to prove we are not by making a notification every 30 days of any trade that somebody makes for us--we may not have even been involved, but we have a fiduciary that we asked to trade for us, and then we are going to have to make that representation.

Has anybody asked the question: What happens if you do have inside information, have no involvement whatsoever in a trade because you put it in a trust account for yourself, but it is still being traded and they happen to coordinate at the same time? Are you guilty of insider trading or are you going to spend $50,000 to $100,000 proving that you are not guilty?

This is a fine institution. It can be better, but it is best when it fixes the real problems, not the symptoms of the problems.

AMENDMENT NO. 1473 TO AMENDMENT NO. 1470

Mr. President, I ask unanimous consent that the pending amendment be set aside and that amendment No. 1473 be called up.

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Mr. COBURN. This is a bipartisan amendment. This amendment is sponsored by Senator McCain, Senator McCaskill, Senator Udall from Colorado, Senator Burr, and Senator Paul, as well as myself.

This is a straightforward amendment. We have asked for this multiple times but have not gotten it. What this amendment says is, every bill that comes before Congress and to be considered by the Senate should determine whether it is duplicating something that is already happening in the Federal Government. It is common sense, and all we are saying is to have an analysis by the CRS, Congressional Research Service, to determine if the bill creates a new Federal program, office, or initiative that would duplicate or overlap any existing Federal program, Federal office, or initiative with a similar mission, similar purpose, similar goal or activities along with a listing of all the overlapping duplicative Federal programs or offices or initiatives or initiative.

Now, why is that important? Last February the GAO brought to us the first third of the Federal Government and outlined to us $200 billion worth of spending on duplicate programs. They gave it to us. It was held as a great thing. Now we know we have all of these areas: 82 teacher-training programs, 47 job-training programs, 56 financial literacy programs, and on and on. They brought that to us, and we all said that was good. The problem is we didn't do anything about it. If we want to restore confidence in the Congress, do something about the problems that have been identified already.

This is a good government policy that says before we act on a new bill that we actually will know what we are doing, and we will have checked with CRS, and they will tell us if we are duplicating again something that is already happening now.

One of the other amendments we should pass is to have every agency give us their list of programs every year. Do you realize there is only one agency in the Federal Government, one department, that actually knows all their programs? There is only one. It is the Department of Education. They are the only ones we can go to and find a list of all of their programs. The rest of them don't know it. There is no catalog. They have no idea.

So before we pass a new piece of legislation, we ought to at least have the help of the Congressional Research Service, and we ought to pass good legislation that doesn't duplicate. It may be a well-intentioned piece of legislation, but because we, as a Congress, have failed in our oversight responsibility, we don't know that it is duplicative when we bring it to the floor and pass it in the Senate.

All I am asking is, let's do a doublecheck, especially in the time of trillion-dollar deficits. We ought to do a doublecheck and make sure we are not duplicating something that is already happening.

That is important for a second reason: If we don't know we are duplicating something, that means we are not ``oversighting'' what is occurring right now, the program or the office or the initiative that is out there now, if we don't have knowledge of it. Rather than create a new program, it might give us the opportunity to fix one that was well-intentioned but is not working.

So this is a good government amendment that is bipartisan that says: Let's do this before we pass additional legislation. But let's know what we are doing. It is complete and it is thorough. It also will provide greater transparency for both us and taxpayers regarding the impact of the legislation we are passing.

Some may say: What if we have an emergency? This has a clause in it that says if it is an emergency, that requirement is waived. So if in the case of an emergency we need to do something, we will waive the requirement that we have to look at CRS to see if there are duplications. So it is a commonsense amendment. I would hope my colleagues will support it, and that we can, in fact, actually fix the real problems not the symptoms of the disease.

AMENDMENT NO. 1474 TO AMENDMENT NO. 1470

Mr. President, I ask unanimous consent that the current amendment that is pending be set aside, and I call up amendment No. 1474.

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Mr. COBURN. Mr. President, this is another good government amendment. If we want to restore confidence, this is something we should do. It says before we vote on a bill, we are going to have at least 72 hours to read it. It is going to be available online with a CBO score so that when we cast a vote, we actually know what we are casting a vote on and we actually know how much it costs. It just says it has to be online for 72 hours.

In other words, we get the privilege of reading the bills we are voting on, and we also get the privilege of knowing the financial costs of the bill or at least an estimate of the financial cost and what that will entail. This transparency is designed to make the Senate better. If we want to build confidence with the American public, then the way we build confidence is to assure them that we knew exactly what we were doing when we cast a vote, not guessing

at what the consequences and the details of that legislation are.

For many pieces of legislation right now, what we have seen in the last 2 or 3 years is there was no time given, no capability to study the legislation to make improvements, and many of the pieces of legislation came without the ability to modify it. If we cannot read the legislation, then we cannot amend it. What does that tell us about the legislative temperament and thoughtfulness of the Senate? We cannot read it, we don't have time to contemplate and consider it, and we cannot amend it even if we could. That doesn't have anything to do with the Senate as it was designed and has functioned for the last 170 years. It has everything to do with politics today rather than the best long-term interests of the country.

Amendments like this have gained a large amount of bipartisan support and have had the support in the past when we voted on it, although we have not acquired the 67 votes that have been necessary in the past to pass it. The cosponsor of this amendment is Senator McCain. He understands the importance of reading what we pass. All of our colleagues do. Why not put in the self-discipline that we have to rather than the political moment that says we have to vote on this whether we know anything about it or not?

During the health care debate, eight of my colleagues sent a letter to review the health care legislation. They ultimately voted for the health care legislation. Their request was to give them 72 hours to read the legislation. The legislative text and complete budget scores from the Congressional Budget Office of the health care legislation considered on the Senate floor should be made available on a Web site the public can access for at least 72 hours prior to the first vote to proceed to the legislation.

Why shouldn't the public be able to see what we are doing 72 hours before we do it? Just as important, why shouldn't we be able to know what we are doing before we vote so it is straightforward, commonsense, and transparent to the American public as well as to our colleagues in the Senate that now we have the time available to read a piece of legislation contemplated and hopefully have the opportunity to improve it. What is the goal? The best long-term outcome for the country.

AMENDMENT NO. 1476

Mr. President, I would ask that the pending amendment be set aside, and I call up amendment No. 1476.

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Mr. COBURN. Mr. President, this amendment would provide a complete substitute for the STOCK Act. It requires Members and staff to certify that they have not used inside information for private financial profit. In other words, they are going to make an affirmative statement under the law that they have not violated section 10b of the Securities and Exchange Act. All Members would be required to sign the following statement on an annual financial disclosure form: I hereby certify that the financial transactions reflected in this disclosure form were not made on the basis of material nonpublic information.

The STOCK Act does not create new restrictions for Congress against insider trading. We all know that. Those restrictions are there. There are no new restrictions. We don't change the restrictions at all. The SEC has stated that the Members of Congress and staff are already subject to insider trading laws. They just need some clarity with that. They also would like to have timeliness with that.

In fact, all Americans are subject to these laws, including the Senate, found primarily in section 10b. This provision restricts anyone who trades stocks from using material nonpublic information to profit financially, and Congress is no different from anybody else.

The STOCK Act was carefully written to carefully reaffirm that Congress is not exempted from these laws, and I believe the chairman stated that just a moment ago, which we would include in this. As such, the bill brings no new reforms to the table nor does it create any real expectation that behavior will change. It just requires paperwork filing. All Members and relevant staff should have to certify they are not trading on private information.

Each year every Member and certain high-salaried staff are required to disclose their financial holdings. Senate rule 37 also already prohibits any Senator or staff from conflicts of interest. That would be a conflict of interest. Specifically, rule 37 prohibits the receipt of compensation by virtue of influence improperly exerted from his position as a Member or officer or employee.

So we are covered doubly. We are already covered under rule 37, and we are covered under section 10b of the Securities and Exchange Act.

If, in fact, somebody fails to do this, then they will be liable under the False Statements Act in title 18, section 1001, which makes it a crime to lie to Congress. Section 1001 prohibits anyone from knowingly and willfully making any material false, fictitious, or fraudulent statement to the government. The punishment for violating the False Statements Act is a fine and a prison term up to 5 years. This does not mean that someone who makes a good-faith effort but mistakenly forgets something will face punishment.

Yet any Member who knowingly signs that form in error will be liable for making a false statement on his or her finances, carrying large penalties.

I think efforts to reestablish trust in the Congress are important. I disagree with my colleagues that this is one that will make a difference. It won't. Nothing materially changes other than a paperwork requirement. Nothing materially changes other than having to report every 30 days instead of annually.

What is the real problem? The people of this country do not have confidence in Congress because Congress does not address the real issues of the country.

Mr. President, I yield the floor.

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Mr. COBURN. I would make one other point, and I am not trying to put my chairman in the hot seat, but nobody in this Chamber can name somebody right now who is trading on inside information. I believe that is a true statement. Yet we are changing the law not because anybody has done something wrong but because we are struggling to try to get people to think we are doing things right. There is nothing wrong with that as long as we are not going to entrap our colleagues.
The question I have is, if we can't name somebody and if

there is not factual truth, what we are really putting the Senate on notice for is that, by the way, you are assumed to be trading on inside information now, and therefore we must do this to ensure that you are not. Well, I don't believe anybody in this body is doing that. And when we put our Members in that position by changing the law to, for example, 30 days--if I have three stock tradings and I miss it by 1 day, what is the consequence of that filing and of this bill? What is going to be the penalty that comes out of the Ethics Committee for missing it 1 day or missing one of the three trades because you didn't know? We have lots of questions that are not answered.

I can tell my colleagues that many Members of this body have spent a lot of their personal money defending themselves on accusations that were absolutely untrue before the Ethics Committee, and that should be addressed and clarified in the body, the report language, of this bill.

I have no doubt this bill is going to pass in one form or another. I understand I am in the very slim minority of people who think it is unnecessary because I think the law already applies to us, and I also don't think we have a bunch of cheats working in the Senate. But would the Senator agree through the Chair that we ought to make clarification of everything we can so we know what the ultimate results are or are we going to leave that up to the lawyers on the Ethics Committee? What are we going to do with that? Are we going to determine what the penalties are for late filing or an accidental omission? What is going to be our direction to the Ethics Committee in this regard?

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Mr. COBURN. Mr. President, I have one more question for the chairman.

If, in fact, this is what we should do--and I think the body is going to agree this is what we should do--does not the Senator think this should apply to the administration as well, the executive branch, that this should apply the same 30-day rule to every member of the executive branch? You talk about real knowledge of inside information, they have it. We do not have it. They have it. Why would this rule not apply to--no matter who is President--executive employees in the administration?

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Mr. COBURN. Every change in every investment we have, we file every year. We already do that. We are already under rule 37 of the rules of Senate Ethics, which forbids any conflict of interest action that would benefit ourselves. That would include inside information to trade stocks. There are 5 to 10 times as many senior executive positions within the administration than Members of Congress that, in fact, this same thing should apply to.

If the important thing is ``within 30 days,'' my hope would be the chairman and the sponsor of the bill, Senator Brown, would give very clear instructions to the Ethics Committee on how this is to work. Because I will note for you, last year 16 Senators got a 90-day extension on their filings with the Ethics Committee. That is 16 percent. We have to have some vow to make sure we do not put the Members who are absolutely innocent of anything in a corner because they cannot timely respond to this bill.

So my hope is--and I will finish with this; I know Senator Brown wants to speak--looking at the timeliness of the filing I think is important to still accomplish what you want, but not make it so rigorous that people are going to fall out of that. We all know how things get busy here, how we come in, we come out. We are traveling, and we have all these things we are responding to. It will be difficult for many Members to comply with the 30 days.

My hope would be you would look at that, and you would also look at rule 37 of Senate Ethics because, in fact, we are already doubly covered. We are covered under 10b. And I do not have any problem with modifying my amendment to say we are covered so you cannot have a defense to say you are not. But we are also covered under rule 37, which forbids any conflict of interest under which you would benefit personally.

With that, I yield the floor and thank the chairman of the committee.

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