Jumpstart Our Business Startups Act

Floor Speech

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Mr. GRASSLEY. Mr. President, soon, around the 12:30 hour or on one of the seven votes this afternoon, we are going to be voting on cloture on the STOCK Act. I have 45 minutes allotted to me to speak about the disappointment I have with the way this has been handled and why I think the parliamentary procedure is wrong and why the whole process irritates me.

Bipartisanship happens to be alive and well in Washington, DC, where most of our constituents believe it is never working. Earlier this week, we had the Republican majority leader of the House and the Democratic majority leader of the Senate--that is bipartisanship--work together to thwart the will of 60 Senators and 286 Members of Congress. The end result is, as well-meaning as the people behind this maneuver might be--the end result is that 60 Members of the Senate are going to be denied an opportunity to pursue what they had previously voted for and 286 Members of the House of Representatives, cosponsoring the language of my amendment, are not going to have a chance to do what 286 Members of the House want to do. As I said, this is bipartisanship, but it is not the kind of bipartisan cooperation, intended or not, this Nation deserves.

I will not ascribe motives to anyone in this body, but I know that today's action only serves the desires of obscure and powerful Wall Street interests, and it undercuts the will of the overwhelming majority of Congress I just described. Once again, it is an example of Wall Street being heard in Washington and maybe the common persons throughout the United States not having their will expressed.

With this process, they took a commonsense provision, supported by a majority of both Houses of Congress, and they simply erased it. In other words, we have to remember, when we have a 60-vote requirement in the Senate, we know what that 60-vote requirement is meant to do; that no amendment under a 60-vote requirement is ever going to be adopted. That was surely the motive behind the 60-vote threshold on the amendment I got adopted when this bill was first up, because the Democratic leader voted against it, the Republican leader voted against it, the Democratic manager spoke against it, and the Republican manager was against it. Common sense tells us, if we study the Senate, an amendment such as that is never supposed to get adopted. But we got the 60 votes to get it adopted. Frankly, I was surprised we got the 60 votes to get it adopted. But that is taken out of the bill we are going to be voting on this afternoon.

My amendment simply says that if someone seeks information from Congress or the executive branch to trade stocks, Congress, the executive branch, and the American people ought to know who they are. Nobody is saying they cannot do it, but we ought to know who they are. We do that through the process where everybody ought to know who lobbyists are--not that lobbying is illegal or wrong, but it ought to be transparent. With transparency comes accountability. The same way this amendment asks these people who are involved in seeking information to register so we know who they are. The amendment makes nothing illegal. But we ought to know who these people are who seek political and economic espionage. We ought to bring all that out of the shadow, into the public's information.

But the leadership of both parties--the majority in the House and the majority in the Senate--went behind closed doors and made that provision magically disappear. What they did was truly amazing because a handful of Senators and Congressmen overrode the will of 60 Senators and 280-plus backers of my amendment in the other body. First, the majority leader in the House said the definition of political intelligence was so vague he could not possibly figure out how to define it. That is the excuse given for stripping any regulation of political intelligence, my words, or political and economic espionage from the STOCK Act when it was taken up in the House of Representatives.

Let me tell you why that excuse is truly amazing to me and quite a surprise. It is because the House of Representatives put in a diluted provision that uses the very same definition I had in my bill of what political intelligence gathering is. Then, by taking out my language and putting in theirs, they got it done because it was an excuse, that the language I had in my amendment was so vague. But you know what. They took that very same language and put it in their amendment, calling for a study of political and economic espionage and political intelligence and used it.

Let me go back to section 7, part b, and quote:

Definition--for purposes of this section, the term ``political intelligence'' shall mean information that is derived by a person from direct communications with an executive branch employee, a Member of Congress, or an employee of Congress; and provided in exchange for financial compensation to a client who intends, and who is known to intend, to use this information to inform investment decisions.

That is the definition that they thought we don't know what political intelligence is, so we should not be passing this amendment, even though 286 Members of the House of Representatives have sponsored a bill to do it and take that very same definition that they say is so vague and put it in a bill for the purposes of studying something. That seems pretty straightforward, doesn't it? That definition seems pretty straightforward. Of course, now that definition will only by applied to a study, not to legislation with real teeth--because the powerful interests of Wall Street are winning out.

If you think that is bad, this is what happened to the STOCK Act in the Senate. By now, I think just about everybody in this body knows how strongly I feel about this amendment that was adopted by this body 60 to 40, under a rule requiring 60 votes because that kills any amendment--but it did not kill this one because we were right. I have spoken many times about the dangers of unregulated political and economic espionage. I have reached out to the leadership to express my concern and written a letter with Senator Leahy, the chairman of the Judiciary Committee, on the importance of our STOCK Act provisions.

I said that I was willing, if necessary, to negotiate on the language of my amendment, and that would be on the question of what is political intelligence. But it seems to me one doesn't need to negotiate that if we pass something with that definition in it. The House already has 286 cosponsors with that definition in it, but they take that same definition and put it in the amendment in the other body for a study, not an amendment with any real teeth.

So when I said I was willing to negotiate, what was the response? Nothing. I was not even given the courtesy of being notified before cloture was filed. So it was kind of like an ambush, plain and simple. Just like those people who traffic in political and economic espionage, this process has been cloaked in a great deal of secrecy.

Now the claim is made that the Senate was forced to take up the House bill because an unnamed Republican was threatening to object to a conference. However, no Republican--or any Senator, for that matter--has publicly owned up to trying to stop this bill from going to conference. But even if we accept this fact, there are still more questions. Supposedly we are taking up the House bill because the Senate does not have time to take two or more cloture votes. Throughout this Congress, we have spent weeks in nothing but quorum calls, but suddenly we have run out of time.

Of course, in less than 10 days we will be leaving Washington, DC, for a 2-week recess. I intend to go home and have town meetings, but we are not going to be doing business here in Washington, DC. So I have an idea for people to consider. With congressional approval ratings in the near single digits, why can't we spend part of that time getting the STOCK Act right? And by getting it right, I see nothing wrong with the basic underlying piece of legislation, but when there is a chance to bring transparency and accountability through the registering of people who are involved in political and economic espionage, I think we ought to do it, and that is what I mean by getting the STOCK Act right.

The Washington Post said that my amendment, combined with Senator Leahy's political corruption amendment, ``transformed the [STOCK Act] into the most sweeping ethics legislation Congress had considered since 2007.'' Maybe you don't agree with the Washington Post all the time, and I don't agree with them all the time, but they are looking at things on a wider scale, and they are saying that a Congress that doesn't have a very good approval rating has a chance, for the first time in 5 years, to do sweeping ethics legislation that we need in order to improve the Congress's reputation by the public.

So isn't it worth taking just a couple of extra votes to get it done right and to make Congress look better? I think so, but apparently a small handful of people in the House and the Senate who make the decisions on how we are going to do business around here--not taking into consideration the votes of 60 Senators supporting this--have other ideas.

Well, at the end of the day, here is what will happen if we don't proceed. There are about 2,000 people working in the completely unregulated world of political intelligence or political and economic espionage. Right now, these people have to be celebrating because they are in the shadows. They want to stay in the shadows. They are celebrating because they know it is business as usual. They can continue to pass along tips that they get from Members of Congress, Senators, and staff, and no one will be the wiser. They pass along these tips to hedge funds, private equity firms, and other investors who pay them top dollar. The lobbyists get rich, Wall Street traders get rich, but the American people lose.

At one time, these folks who set up these meetings for Members of Congress or even in the executive branch--and I have examples to show that--used to charge $10,000 for just setting up a meeting. They don't charge $10,000 anymore because that information got out and it was too embarrassing to them. So now there is kind of a relationship built up here between the people who know their way around Congress and people who want this information that if there is investment in stock as a result of this and there is an increase in the value of the stock, that one will do their trading through the company. That is a tragic result of this decision by the leadership to leave out the amendment that was adopted by 60 Members of this Congress and would do nothing more--not make anything illegal--than let us know who these people are.

Through my oversight investigations, I have learned that political intelligence gathering for Wall Street is a growing field ripe for abuse. Here are two examples of the type of activity that will continue to be kept in the dark.

In the course of my investigations of a whistleblower's claim, I learned that the Center for Medicare and Medicaid Services has closed-door meetings with Wall Street firms where CMS policies are discussed. No record is kept of the meetings, and employees are essentially on the honor system to make sure they are not giving investors inside information. As an example, the whistleblower who came to us claimed that over a dozen CMS employees spent nearly 2 hours briefing Wall Street analysts and investigators on the taxpayers' dime. A member of the public could not walk in and get that kind of access to that information. CMS is supposed to be working for us. Instead, we found out that they are working for Wall Street. If my amendment fails, we won't know how many of these meetings occur throughout the government and who profits from these meetings.

Another example is an investigation I conducted into the Obama administration's Department of Education. The Department of Education was getting set up to issue regulations on gainful employment that would affect not-for-profit colleges. Several hedge funds had bet big that those new regulations would make it harder for for-profit colleges to do business. Then news began to leak that those regulators were not going to be as tough as was expected. Suddenly, for-profit stocks began to rise, and these hedge fund investors reached out to their friends in the Department of Education.

This is from an actual e-mail my investigators uncovered. It was sent from Steve Eisman, a hedge fund investor, to David Bergeron. He was part of a team in charge of writing these regulations. The e-mail reads:

I know you cannot respond, but FYI education stocks are running because people are hearing DOE is backing down on gainful employment.

To translate that Wall Street jargon, the term ``running'' means that a stock is going up.

Within minutes this e-mail was marked ``high importance'' and forwarded to senior-level political appointees. These appointees included James Kvaal, the Deputy Under Secretary, and another policy expert at the Department and Phil Martin, the Secretary of Education's confidential assistant. To this day we do not know why the Department's higher education policy experts needed to know that a hedge fund investor was losing money. What we do know is that for-profit stock dropped significantly, and if you bet big that these stocks would drop, you likely made a lot of money.

When the Department of Education answered my questions, they admitted to my staff that this e-mail was not a proper contact.

In addition, the Department of Education inspector general is investigating the gainful employment rulemaking process.

These are just two examples in government agencies where reports such as these are just the tip of the iceberg. The more power Washington, DC has, the more it affects financial markets, and the more it affects financial markets, the more people on Wall Street want to pay for information about what is going to happen here on this island surrounded by reality that we call Washington, DC.

Usually, the only way any sort of ethics reform gets done around here is if someone gets caught. With political intelligence, we have the opportunity to create transparency before the next scandal occurs. As government grows, this industry is going to grow, with the potential for corruption. The question is, What are we going to do about it? Transparency is the simplest and least intrusive solution, and if transparency doesn't do the job, then you can legislate. But I have found out through so many of my investigations over the last 20 years that if you bring transparency to something and get it out in the open, it tends to correct itself--maybe not completely but to a great degree.

Originally, in starting investigations, you think you are going to have to have a massive amount of legislation, but when you get transparency involved and the accountability that goes along with it, you find that you don't have to pass a lot of laws, that a lot of people know that if somebody is looking over their shoulder, they are going to do what is right.

Now, we can commission another study, as the House of Representatives wants to do and we are going to be voting on when we vote on cloture here, but that is kicking the can down the road for another year. We can act today by defeating cloture and getting to some of these amendments that have such widespread support in the Congress of the United States. With 60 votes in the Senate and 286 cosponsors in the House of Representatives, this is our last chance to make sure the Senate speaks with a unified voice against secrecy for political and economic espionage people and for transparency in government. We must not allow the special interests to operate in the dark. Just bring them out of the shadows--not that what they are doing is illegal, but we ought to know what it is.

For these reasons, and to support transparency, to support open government, and to support good government, I will oppose cloture on the bill, and I hope a lot of my colleagues--in fact, I hope all 60 of my colleagues who voted for the amendment in the first place--will oppose cloture.

If cloture is invoked, which is likely, I intend to vote for this bill anyway because the underlying bill is a very necessary piece of legislation, but it is not much of a victory for the American people. As the Washington Post said, if it included the Leahy amendment, if it included the Grassley amendment, it would be the most sweeping ethics reform in the last 5 years.

I yield the floor and reserve the remainder of my time. I suggest the absence of a quorum.

The assistant legislative clerk called the roll.

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