By Mark Fischenich, Mankato Free Press

MANKATO — A bill prohibiting lawmakers and their staffs from using inside information to enrich themselves passed the House Thursday — a dramatic change of fortune for a piece of reform that Mankato Congressman Tim Walz, the chief sponsor of the bill, had watched languish for years.

“This has always been about making sure public officials play by the same rules as everyone else,” Walz said after the legislation passed 417-2. “At a time when Americans are understandably frustrated, this legislation is long overdue.”

The vote followed Senate passage of a similar bill, but the House version was rewritten by leaders of the Republican-controlled chamber and dropped provisions that some senators and certain government watchdog groups hope will be resurrected in a conference committee.

Walz said he prefers that as well but would still consider it an important first step toward reform if the House version becomes law.

Walz’s STOCK Act (Stop Trading On Congressional Knowledge) had just a handful of sponsors until the CBS news magazine “60 Minutes” did a report this fall about members of Congress using non-public information to make substantial profits in stock trades. The report provided new momentum to the bill, but two months ago House Majority Leader Eric Cantor ordered House Financial Services Committee Chairman Spencer Bachus to drop a planned vote on the bill.

“Cantor delivered the cease-and-desist order on behalf of GOP leaders, other chairmen and rank-and-file lawmakers on both sides of the aisle who were concerned that Bachus could help give the bill life by having the committee approve it,” reported Arlington, Va.-based Politico in December.

A spokesman for Cantor told Politico that Bachus was pressured to drop the planned vote because several committee members “felt the legislation was flawed and being recklessly moved solely in response to media pressure.”

Cantor reversed course after President Obama urged passage of the STOCK Act in his State of the Union Address two weeks ago and after the Senate passed its bill 96-3 last week.

“I’m pleased that the Senate passed a stronger STOCK Act today to prevent members of Congress and staff from using insider information for their financial benefit,” Cantor said in a statement released after the Senate vote. “Insider trading at any level of the federal government is unacceptable.”

But Cantor was accused this week of weakening the bill before bringing it to the House for Thursday’s vote. In particular, there was exasperation that a provision added by Republican Sen. Charles Grassley of Iowa was stripped from the bill.

The Grassley amendment would have required workers in “political intelligence” firms to register with regulators in the same way lobbyists do. Political intelligence firms collect government information that can impact the stock market and sell it to Wall Street. It’s a little known industry that generates $400 million in profits, according to some estimates.

“It’s astonishing and extremely disappointing that the House would fulfill Wall Street’s wishes by killing this provision,” Grassley said in a statement.

Walz said he, too, was disappointed to see Grassley’s provision stripped from the bill.

“I’m very supportive of that measure but am, at the end of the day, willing to move something (forward),” he said.

The Senate could refuse to accept the House version and try to restore the Grassley provision during a conference committee — something the good-government organization Common Cause urged Thursday.

Walz noted that both Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell were resistant to Grassley’s amendment.

“I think there’s going to be a strong desire to move (the House bill) on,” he said.

Some lawmakers have suggested that the STOCK Act is redundant — that lawmakers are subject to existing insider trading laws that prohibit other Americans from using non-public information when buying and selling stock. Walz, however, noted that no lawmaker has ever been charged with insider trading even though the average returns on the stock market earned by members of Congress are substantially higher than the overall rate of return, according to independent studies.

“The research seems to show that members of Congress were outperforming the market,” Walz said.

The former West High School social studies teacher said the passage of the bill is a testament to the role the media can play in a democracy. Walz had just four co-sponsors for the bill less than a year ago, a number that grew to nearly 300 following the “60 Minutes” report.

The story by correspondent Steve Kroft suggested that several high-ranking lawmakers had used their positions to make profitable stock trades. Bachus, the chairman of the House Financial Services Committee, was singled out as a prime example.

The Alabama Republican was one of a select group of top-level lawmakers briefed in September of 2008 by Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke, who warned that a global financial meltdown could occur within days.

Bachus bought stock options the day after hearing the dire warnings and made five-figure gains in a single day, according to the “60 Minutes” report.

Bachus “profited at a time when most Americans were losing their shirts,” 60 Minutes reporter Steve Kroft said.

Bachus has denied using inside information in his stock trades and said he was a successful trader long before entering Congress.