Groups Urge Obama Administration to Slow Revolving Door Between Wall Street and Federal Government

Today, 28 organizations urged the Obama administration to slow the revolving door between Wall Street and the government by ensuring that new federal officials don't get extra pay from the financial industry just for taking a government job overseeing the financial industry.

In a letter sent today, the groups urged President Barack Obama and Vice President Joe Biden to require new administration officials coming from the financial industry to forego special compensation frequently offered by their former employers in exchange for their decisions to enter into public service in senior executive branch positions.

Such "government service golden parachutes" are not regular bonuses for work well done. They are special compensation packages frequently given to banking executives solely for the purpose of accepting senior-level positions in financial regulatory agencies or other government positions.

In recent years, former Wall Street officials have taken on a number of high-level roles in the executive branch. Alumni from Citigroup, for example, head the U.S. Treasury Department and Office of the U.S. Trade Representative, while other former executives and representatives of major banks serve as senior economic policymakers and federal regulators overseeing their former employers.

Obama has appointed 56 people with potential conflicts of interest between their government positions and the industries they oversee. President Bill Clinton appointed 64 during his two terms; President George W. Bush, 91 in his two terms.

In July, U.S. Sen. Tammy Baldwin (D-Wisc.) and Rep. Elijah Cummings (D-Md.) introduced the Financial Services Conflict of Interest Act to rein in conflicts of interest and revolving door abuses within financial regulatory agencies.

"Awarding outsized bonuses and gifts of equity to Wall Street executives who leave to go into public service is either a breach of a public corporation's fiduciary duty to its stockholders or a down payment on future services rendered," the letter said. "At best, it creates the appearance of corruption and conflict of interest. At worst, it results in undue and inappropriate corporate influence at the highest levels of government - in essence, a barely legal, backdoor form of bribery."

The Obama administration faces many pending personnel decisions for financial regulators in which government service golden parachutes could come into play, including two openings on the five-member U.S. Securities and Exchange Commission, a vacancy for Treasury Department undersecretary for domestic finance, and two open seats on the five-person U.S. Commodity Futures Trading Commission.

The groups signing the letter are:

AFL-CIO
American Family Voices
American Federation of State, County and Municipal Employees (AFSCME)
Americans for Financial Reform
BCTGM International Union
Center for Biological Diversity
Center for Effective Government
Center for Popular Democracy
CEPR
Citizens for Responsibility and Ethics in Washington
Communications Workers of America (CWA)
Courage Campaign
CREDO Action
Democracy for America
Democracy Matters
Free Speech for People
Friends of the Earth
Institute for Agriculture and Trade Policy
Institute for Policy Studies, Global Economy Project
International Union of Bricklayers & Allied Craft Workers
MoveOn
NEA
Other98
Progressive Strategies
Public Citizen
Rootstrikers
The Marco Consulting Group
U.S. PIRG