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Federal workers relieved by limits on online disclosures

Details of financial transactions by members of Congress and thousands of high-level federal workers were supposed to be posted online last month for anyone in the world to see — a key step, supporters of the move said, toward greater transparency in government.

What happened instead was President Barack Obama signed a law that once again made the financial information of public employees — useful for identifying insider trading or conflicts of interest — difficult to find.

The final score: Privacy, 1; Transparency, 0.

"It is very bad," said Dan Auble, senior researcher with the Center for Responsive Politics in Washington, which advocates for government transparency. "Basically, things are going to stay the way they are."

Obama's move, critics say, gutted the Stop Trading on Congressional Knowledge Act, a bill he had signed only a year earlier.

Known as the STOCK Act, the law's original aim was to deter members of Congress and top staffers from trading on insider information learned on the job.

The legislation made clear that members of Congress and their staff are not exempt from prohibitions on insider trading. But more importantly to transparency advocates, it required them to report investment transactions promptly and mandated a searchable online database for their financial disclosures.

Senate Republicans, though, extended the act's reach to 28,000 managers in the executive branch of government. And with that, it wasn't long before the new STOCK Act was under fire as an invasion of privacy — and worse.

The Senior Executives Association and other groups representing federal workers sued the government last summer in federal court in Maryland, saying that terrorists or other adversaries could use the information to uncover intelligence agents or to kidnap workers traveling overseas.

Even federal employees in the United States, they said, could be targeted for blackmail over debts or for identity theft.

Besides, they noted, they already make financial disclosures that are scrutinized for conflicts of interest, and which may be reviewed by the public upon request.

"On the executive branch side, there is just no evidence that insider trading is a problem," said Carol Bonosaro, president of the Senior Executives Association.

The online disclosure of financial information was postponed, and Congress ordered a study by the National Academy of Public Administration on potential security concerns.

The academy's report, released in late March, sided heavily with federal employees fighting disclosure.

It compared the publication of personal financial information in a searchable database to boiling the proverbial frog — heating the water so slowly the animal never realizes it is imperiled. The academy said the release of exploitable personal data over time could be just as subtle to federal workers.

The academy wasn't persuaded by arguments that this information is already public. It said that a searchable database of this information — coupled with other information that can be gleaned on the Internet — could result in federal employees being targeted by those with malicious intent.

And the academy noted that posting finances online could dissuade potential job candidates from applying for government employment.

Armed with these findings, lawmakers revised the STOCK Act. Now, the financial information of congressional staff members and federal workers in the executive branch won't be posted online.

Images of the disclosure forms filed by members of Congress, congressional candidates, the president, vice president and presidential appointees confirmed by the Senate will be posted online, but the information they contain will not be uploaded to a searchable database.

"The part of the partial repeal that I find the most cynical is the repeal of the searchable, sortable database," said Kathleen Clark, a law professor with Washington University in St. Louis who has written on the STOCK Act.

One provision that remained: Federal workers, lawmakers, the president and other high-level executive branch workers still must report the sale or purchase of securities valued at more than $1,000 within 30 to 45 days, depending on when they receive notice of the transactions.

Previously, more than a year could go by before such transactions were made public.

Bonosaro said her members are relieved. The group withdrew its lawsuit shortly after the president signed the revisions into law.

"It was so worrisome," said Bonosaro. She said she spoke recently with a woman who had had an identity thief file a tax return using her information.

"Her life has been miserable," Bonosaro said. "She said, 'If on top of it my financial information goes online, I'm just going to shoot myself.'"

Keith Curtis, vice president with the American Foreign Service Association, also is pleased.

"This would have been a gold mine for intelligence agencies and potential terrorists and criminals," he said. "It's clear the risks are very considerable and very damaging, and the benefits [of online disclosures] are little to none."

Dr. Joshua Zimmerberg, a researcher and manager at the National Institutes of Health in Bethesda, joined the lawsuit fighting disclosure. Zimmerberg, who said that he does not speak for the NIH, was elated when he heard changes had been made to the STOCK Act.

"There is a need for transparency. There is a need for society to protect against corruption," he said. "But there is a need for individuals to have their intimate financial details off line."

But it was a setback for transparency advocates.

Lisa Rosenberg, government affairs consultant for the Sunlight Foundation, said the reason lawmakers passed the STOCK Act in the first place was the outcry after a "60 Minutes" report on alleged insider trading by members of Congress.

She said lawmakers used federal workers' concerns of privacy and identity theft to undo the part of the law they disliked the most — the transparency.

"They did not like having their financial transactions readily available to the public, to their constituents, and to the competitors and opponents," she said.

Rosenberg said Congress could have excluded certain positions from online disclosures — federal workers overseas or those in highly sensitive security positions. Instead, lawmakers did away with much of the STOCK Act for everyone covered under it.

Rosenberg said it is unlikely that lawmakers will take up the issue again unless their hand is forced.

"They don't want to do this unless there is some sort of public outcry," she said, "And that will only come if there is another scandal."

eileen.ambrose@baltsun.com

twitter.com/eileenambrose

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