Throwing a Wrench in the Revolving Door
by Jessica Schieder, 7/24/2015
Sen. Tammy Baldwin (D-WI) and Rep. Elijah Cummings (D-MD) recently introduced the Financial Services Conflict of Interest Act, which takes aim at the "revolving door." This term refers to people who move from the private sector, to public agencies or Capitol Hill offices, and back to private companies, often bringing undue corporate influence along for the ride. Sens. Elizabeth Warren (D-MA) and Brian Schatz (D-HI) cosponsored the legislation.
Current law is supposed to keep the revolving door in check but doesn't do enough to clamp down on obvious conflicts of interest. One recent poll found 59 percent of Democrats and 57 percent of Republicans believe company executives should not be able to take government jobs that involve regulating their former industry.
The problem is especially significant in the financial services industry. Former employees of the biggest banks – who were directly responsible for the Great Recession – are making decisions that could enrich their past colleagues, Warren recently noted. “No more paying people off to remember their Wall Street friends while they run our government,” she said during a keynote address to the annual Netroots Nation conference on July 18.
The Baldwin-Cummings bill targets employees of banks, financial management firms, credit rating agencies, insurance companies, and others in the financial industry. To reduce conflicts of interest, it would:
- Prohibit financial sector firms from giving bonuses to departing employees who are going to work for federal agencies or legislators.
- Increase the amount of time former federal government employees must wait before lobbying or otherwise attempting to influence their agency or Hill colleagues after reentering the private sector. The bill also expands the definition of “lobbying contact” to include strategizing with former public service colleagues, even when that activity is not formally considered lobbying.
- Require senior financial service regulators to recuse themselves from actions that benefit any of their recent former employers or clients (those within two years prior to joining the public sector).
The bill alone will not eliminate outsized corporate influence, but it is a step in the right direction. It creates space between public servants and their former private-sector bosses in the financial services industry.
When passed and implemented, the bill would serve as a model for dealing with other regulatory agencies and industries. Former employees of the chemical industry, agricultural giants, and energy companies are currently responsible for policy decisions and rules that determine allowable activities by their former (and often future) corporate employers. When these employees return to the private sector, they can use their agency and Hill contacts to influence policy to benefit the corporations that bring them on board.
Regulators and policymakers serve as a vital check on the power and influence of industry in the lives of workers, consumers, and community residents. Government work should serve the public, not become a way to advance the interests of past employers or to establish connections that can be exploited for personal gain in future career moves.
Note: The Center for Effective Government has publicly endorsed the Baldwin-Cummings bill, along with a number of advocacy, labor, and public interest organizations.
For Future Reading:
New White House Initiative on FOIA Expands Government Transparency, The Fine Print, 7/23/2015
Time for Three Strikes and You're Out for Banks?, The Fine Print, 6/17/2015
"No" to Fast Track – Secret, Undemocratic Trade Deals Are Not About Trade, The Fine Print, 6/3/2014