Congress approves wide-ranging ethics rule

Congress gave final approval to one of the most sweeping ethics overhauls in years, clamping down on insider trading by lawmakers and administration officials in an election year push to improve the public’s low opinion of Washington.

The Senate passed the legislation overwhelmingly Thursday, 96 to 3, sending it to President Obama, who had called for such a measure during his State of the Union address.

Few lawmakers want to stand in the way of ethics reforms at the moment, and the bill was received with gusto in Congress — even though one of its most compelling provisions was stripped by Republicans in the House.

That provision, which won bipartisan support in the Senate last month, would have shed light on the evolving trade in “political intelligence” — the practice of individuals acquiring and then selling the inside scoop on legislative action to traders on Wall Street.

Democratic leaders in the Senate decided not to continue to fight for the provision, which is important to the financial industry.

“It’s once again an example of Wall Street being heard in Washington, and maybe the common person throughout the United States not having [their] will expressed,” said Republican Sen. Charles E. Grassley of Iowa, who crafted the political intelligence provision.

Grassley’s measure would not have banned the practice of selling political insight, but would have required those who broker such information to register, as lobbyists are required to do.

“We ought to know who these people that seek political and economic espionage — we ought to bring all of that out of the shadows,” Grassley said. Leaders of both parties, he said, were to blame for allowing that provision to “just magically disappear.”

Versions of the Stop Trading on Congressional Knowledge Act, or Stock Act, had been circulating for years, but gained import after reports that lawmakers were using their political positions for personal financial gain.

The legislation expressly prohibits members of Congress and their staffs from using nonpublic information for investment and trading decisions, amending various federal regulations to include them in the ban.

As the bill made its way through the Congress last month, senators engaged in robust debate and loaded it up with amendments, including one that extended the trading ban to members of the executive branch. Just three senators and two members of the House voted against it.

Rep. Nancy Pelosi (D-San Francisco), the minority leader, acknowledged the shortcomings in the final product. “We know more must be done,” she said.

Craig Holman, a chief lobbyist for Public Citizen, the consumer advocacy group, called the bill’s passage “a victory of sorts.… But it is also a missed opportunity for more sweeping ethics reforms.”

lisa.mascaro@latimes.com