Ethics in Government Act of 1978

The Watergate scandal led Congress to write ethics rules into federal law. The Ethics in Government Act, signed by President Jimmy Carter on October 26, 1978, required senior officials in all three branches, including the President, members of Congress, federal judges, and top executive appointees, to file public financial disclosure reports listing assets, income, liabilities, and outside positions. It also created the Office of Government Ethics, originally within the Office of Personnel Management and independent since 1989, and strengthened restrictions on lobbying by former officials.

Title VI of the act created the independent counsel, a prosecutor appointed by a special panel of judges at the Attorney General's request to investigate high-ranking officials, who could be removed only for good cause. Independent counsels investigated matters including the Iran-Contra affair and President Bill Clinton's conduct. The Supreme Court upheld the arrangement in Morrison v. Olson in 1988, over Justice Antonin Scalia's dissent that it violated the separation of powers. After criticism from both parties, Congress let the provision expire on June 30, 1999.

The Justice Department replaced the independent counsel with special counsel regulations in 1999, under which the Attorney General appoints and can remove special counsels. The disclosure system remains in force and was expanded by the STOCK Act of 2012, which requires prompt reporting of stock trades by members of Congress and senior officials, a subject of continuing proposals to ban congressional stock trading. Supporters say disclosure deters conflicts of interest, while critics say the rules are complex, enforcement is weak, and loopholes remain.