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The Sept. 27 meeting with Mr. Dudley exemplifies the private meetings some Wall Street investors have with top Fed officials, in which they can gain access to potential early clues about Fed actions. Hedge funds have been pushing to get more information about the inner workings of the Fed, according to people familiar with the situation, as detailed in a Wall Street Journal page-one article Nov. 23.
Its not a simple legislative drafting matter, he told reporters after the hearing which heard testimony from five expert witnesses on insider trading and congressional ethics. But he said, Im confident we can get a good part of this done by the 15th. Explaining the need for brisk action, he said, We start with the obvious reality that Congress is at one of its low points in American history in terms of public trust. And he added that a recent 60 Minutes story that raised new questions really affected people. I find people asking me about it as Im at home going through the supermarket and taking a walk with my wife-- and being upset about it. I think it is something we ought to try to answer quickly.
The House Financial Services Committee has set a hearing for next Tuesday on a parallel bill to outlaw congressional insider trading. Lieberman said Congress should first make it clear that under existing law, there is no exemption for members of Congress from the laws punishing insider trading. As one of the witnesses Thursday, Indiana University law professor Donna Nagy said, the 60 Minutes broadcast erred in stating that congressional insider trading is perfectly legal. But there is, Lieberman said, an ambiguity about how successful a prosecution of a member of Congress would be for using insider information to make money. We ought to clarify that as quickly as we can.
Pushing for the ban on congressional insider trading at Thursdays hearing were two freshman senators who must face voters next year when they run for re-election, Sen. Scott Brown, R- Mass., and Sen. Kirsten Gillibrand, D- N.Y. Each has sponsored separate bills which attempt to explicitly ban congressional insider trading. Gillibrand told reporters, it sounded from the chairman that he really wants to expedite it, get it out of committee which is exciting .I think weve got great momentum; the statement by the chairman was fantastic that he supports this and that he wants to do a markup in December.
Nagy contended that congressional insider trading is already illegal under existing law. I think its superfluous, she said of the ban being proposed by Brown and Gillibrand. But Brown noted that there have been no successful prosecutions of members or their staff and I believe the uncertainty surrounding the existing legal framework provides an excuse for enforcement agencies (the Securities and Exchange Commission and the Commodities Futures Trading Commission) to avoid the politically difficult task of policing Congress, especially when Congress controls the purse strings for those agencies. But the proposal faces a long, twisting road before possible enactment.
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