updated 3/20/2012 6:47:32 PM ET 2012-03-20T22:47:32

Senate leaders on Tuesday abandoned their own, stronger version of legislation to explicitly prohibit members of Congress and other government officials from making investments on insider information. They agreed to accept a scaled down House version instead.

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Both chambers overwhelmingly passed different versions of the legislation designed to approve Congress' image, but the Senate included two provisions that were stripped out by the House.

One would have required registration and public reports — similar to those filed by lobbyists — by anyone selling inside information learned from Congress.

The second was designed to strengthen criminal laws in public corruption cases, raise maximum penalties and restore tools used by prosecutors in such cases that were limited by the Supreme Court.

Senate Majority Leader Harry Reid, D-Nev., said he lacked the votes to establish a House-Senate conference to work out a compromise between the two versions.

Reid filed a cloture motion, a procedural tactic that would limit debate and allow the Senate to vote on the House bill. The motion would require a super majority of 60 votes in the 100-member Senate. Michael Brumas, a spokesman for Republican leader Mitch McConnell of Kentucky, said McConnell would support the motion.

The procedural motion likely would be approved by Thursday, clearing the way for final congressional action soon afterward.

Under the House legislation, new financial transactions by members of Congress, top-level congressional employees and thousands of other government workers would have to be filed publicly online within 30 or 45 days — depending on when the officials received official notice of the transactions. This would be in addition to the annual public reports now filed.

The House already posts the annual financial disclosures on the Internet, but the Senate requires those seeking the information to appear in person at a Senate office building.

Reid said he abandoned the Senate's version because "we need to address this issue more quickly, because otherwise we don't address it at all."

President Barack Obama said previously he would sign legislation known as the STOCK Act, which stands for Stop Trading on Congressional Knowledge.

Sen. Patrick Leahy, D-Vt., sponsor of the proposals to aid prosecutors, blamed the Republican-run House for stripping the language.

"I regret that Republicans in the House eliminated the bipartisan anti-corruption amendment in the STOCK Act, which was adopted overwhelmingly by the Senate, and I am disappointed that there are now objections to going to conference to restore this important anti-corruption provision," the Senate Judiciary Committee chairman said.

Sen. Chuck Grassley, R-Iowa, who sponsored the registration requirement for anyone selling information learned from Congress, blamed Reid.

"The Senate passed this legislation weeks ago, and the majority leader just now says he doesn't have time to defend the Senate's position," Grassley said. "His decision is a real blow for good government and transparency."

As much as anything, the bill is a response to a CBS "60 Minutes" segment in November raising questions about lawmakers enriching themselves through investments based on nonpublic information they gleaned in their jobs.

Insider trading is already illegal and there's no exemption for government officials. But the perception persists that it's taking place in the halls of Congress, perpetuated by occasional investigations and media reports of key lawmakers buying, selling or holding stocks or real estate in areas where they influence policy.

The Office of Congressional Ethics is now looking at the trading activities of Rep. Spencer Bachus, R-Ala. In the two months surrounding the 2008 financial collapse and subsequent $700 billion economic bailout passed by Congress, Bachus made more than three dozen trades.

Bachus, now chairman of the House Financial Services Committee but then the panel's senior Republican under a Democratic leader, participated in closed briefings on the crisis by Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson. He's denied using inside information, and subsequent records show he incurred a net loss of $19,490.

Bachus has denied any wrongdoing.

With Congress enjoying only a 19 percent approval rating, according to the latest Associated Press-GfK poll, lawmakers are eager to be seen as reformers early in an election year. Timely exposure of their own financial transactions is a step in that direction, according to watchdog groups.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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