Mike & Co. –
The revolving door between Manhattan and Washington may be a subject of some import for those reasons this. It’s also the subject of legislation supported by HRC that delineates a way to engage the best and brightest in government service without creating a tacit quid pro quo or the appearance (or fact) of corruption. And a subject that HRC has addressed often — the revolving door, an issue at the heart of the conflict between private interest and public trust.
How does Sen. Tammy Baldwin’s Financial Services Conflict of Interest Act seek to prevent Wall Street firms from offering bounty-style bonuses to their employees who leave for government positions? How can the issue drive home HRC’s message of transparency and accountability in government? More below.
Good weekends all…
Revolving Door — Backdoor Lobbying?
A common progressive proposal, especially since the financial crisis, has been capping or eliminating bonuses provided by Wall Street firms to employees with federal government experience. HRC has spoken out against the strategy, and last summer, Sen. Baldwin introduced the Financial Services Conflict of Interest Act alongside Rep. Elijah Cummings’ companion House bill
Defense and Offense
Some Wall Street firms claim that bonuses triggered by an employee entering federal employment are just a way to ensure their workers remain valuable. These arrangements allow them to keep a stable of top experts in their fields, so that they are less likely to be poached by other industries or by competitors.
Those like HRC and Sen. Baldwin, though, see the practice as a “pay to play” system. They worry that former Wall Street workers will treat their federal government jobs as way stations between high-paying private sector job and may use their government position lobbying on behalf of their former (and future) employer.
Sen. Baldwin’s bill would restrict the use of compensation packages from private-sector employers that are contingent on an employee accepting a position in the government. The bill also imposes disclosure requirements and requires that regulators recuse themselves in instances where former or prospective employers may benefit from their actions.
Under current law, former officials can become de facto lobbyists when they take jobs as “outside advisors” or “strategic counselors” for firms, often the same firms they used to regulate. Baldwin’s bill would restrict that practice by forcing those who aren’t lobbyists only by virtue of their job title to register as such.
Conflict of interest rules for procurement officers, FDIC officials, and federal regulators are expanded under the bill as follows:
- Prohibits a federal employee from becoming personally and substantially involved with the award or administration of a contract to a former employer for two years after leaving the employer
- Expands from one to two years the conflict-of-interest restrictions on federal examiners
- Increases from one to two years the period during which a former federal procurement officer responsible for a particular federal contract may not accept compensation from the contractor, including for lawyering or lobbyist services (this prohibition extends to accepting compensation from affiliates and subcontractors
- Applies penalties against the supervisor of a large financial service regulatory agency as well as the supervisor of a senior examiner for knowingly accepting compensation during the prohibited two-year period after the individual’s regulatory service ends
- Bars regulators, for a one-year period from engaging in legal representation, lobbying, or assistance for any person (except the United States) in any judicial proceeding pending under his or her official responsibility as a regulator
- Bars, for a two-year period, similar activities on behalf of any person (except the United States) before any executive branch agency or Congress in connection with any pending matter
What’s the Next Step?
The bill is far from guaranteed-passage, with just four Senate cosponsors and 16 in the House bill — all Democrats. But that does not diminish the impact the bill can have on the national debate.
As you recall, HRC came out strongly in August 2015, co-authoring an op-ed piece on the Huffington Post website with Sen. Baldwin. In that article, they wrote that we must “make sure those who do the people’s work in Washington are actually doing it — not worrying about former or future bosses at the public’s expense.” Clinton and Baldwin advocated fines for corporations and executives, responsible for infractions, putting their pay on the line, clawing back bonuses.
HRC’s fervent support for Sen. Baldwin’s legislation demonstrates the priority of her commitment to regulating both Wall Street and Washington, as well as holding those who pass through the revolving door more accountable for their actions.