(Post updated at 5:50 p.m.)
The House on Thursday passed a bill that would ban congressional insider trading. The STOCK Act passed overwhelmingly, 417-2, despite some partisan disagreements over its scope.
With congressional approval at all-time lows, the bill was widely seen by lawmakers as a small step in restoring public confidence. But differences remain to be worked out with a Senate measure, passed last week, before a bill could be sent to President Obama.
"This is a victory, not for us," said Rep. Tim Walz, D-Minn., who had pushed for the ban on congressional insider trading for years. "It is one tiny step on a journey, which is about restoring the faith of the American people in the institution."
Many experts say it's already illegal for members of Congress to trade stocks based on non-public information they obtain because of their role as lawmakers. But a report last fall on CBS's "60 Minutes" raised questions about whether they are actually covered by insider trading laws.
The bill, which has languished in obscurity for years, gained more than 200 co-sponsors virtually overnight after the "60 Minutes" report.
"The intent is to get members of Congress not to trade on their information that they have through their work," said Rep. Louise Slaughter, D-N.Y., an original author of the measure.
In addition to explicitly banning insider trading by members of Congress and their staffs, members of Congress would be required to report financial transactions within 30 days, with information about trades posted online. Currently, paper disclosures are only required once a year.
The House bill left out a Senate-passed provision that would require people who work in the political intelligence industry to register much like lobbyists. Political intelligence firms gather information from members of Congress and their staffs and sell it to hedge funds and other investors looking for an advantage.
"This is an industry that makes $400 million a year – as far as we know. It could be much, much more," said Slaughter. "Why can't they be as regulated as a regular lobbyist, so that at least members of Congress know to whom they're speaking?"
An earlier version of the House bill contained the provision, but when Majority Leader Eric Cantor, R-Va., introduced the version that the House ultimately approved, it had been removed.
Speaking on the House floor, Cantor said the provision "raises an awful lot of questions," and noted that his bill calls for a study of the political intelligence industry instead.
"The thrust of this bill is about making sure that none of us in elected office or those in the executive branch are able to profit from non-public information," said Cantor. "The political intelligence piece is outside of this body. And we are talking about us and the perception that has gathered around our conduct."
A spokesperson for Cantor said the political intelligence provision could have affected the First Amendment rights of everyone from people in local Rotary Clubs to journalists.
But Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington, said the lobbying to kill that provision in the House version was intense.
"And there were rumor campaigns going around about all of the things that Wall Street folks were saying it did, which it didn't do," said Sloan. "But the real consequence would have been that political intelligence firms would have been brought into the sunlight."
The House bill also left out a Senate amendment that would make it easier for prosecutors to bring public corruption cases. But some House Republicans raised concerns that it wouldn't hold up to legal challenge.
Cantor insisted that the House bill is actually stronger.
The likely next step is a conference committee, where the differences between the two bills could be worked out.