It’s Past Time to Stop the Revolving Door Between Wall Street and Financial Regulators
By Kenneth Quinnell, AFL-CIO
The job of U.S. financial regulators is a vitally important one. A well-regulated Wall Street is essential to create an economy that works for working people. Regulators protect the stability of financial markets and help us avoid crises. Because of the important role these regulators serve, it’s vital that there be no conflict of interest when it comes to protecting the health of our economy and working families’ investments.
But we have a problem. The private sector is pouring so much money into regulators’ pockets that they forget they really work for America’s people. The system right now allows for a revolving door between government and the private sector, allowing the richest among us to play both sides so they can build even greater wealth and power. Yes, we need experienced people in these jobs, but it’s ludicrous to believe that the only people competent enough to regulate the system are those who stand the most to profit from it. That belief doesn’t even pass a basic smell test, and it decimates the fundamentals of good governance.
For example, more than 900 former government officials—including 70 former members of Congress—have lobbied for the financial services sector. Frequently new public-service workers come directly from Wall Street in possessions of multimillion-dollar golden parachutes that were given to them because they were taking on decision-making roles in government. They get paid both by shareholders and taxpayers, and it’s understandable that they are likely to side with whoever gave them those millions of dollars. Meanwhile, working Americans are losing on all sides, with their incomes being constantly pinched to inflate Wall Street profits. No matter how bad Wall Street messes up, working people always foot the bill.
But there is some hope. Sen. Tammy Baldwin (D-Wis.) and Rep. Elijah Cummings (D-Md.) recently introduced legislation that will stop Wall Street’s slow bleed of America’s people and get the fox out of the hen house, giving regulators more independence and freedom from the influence of their future or former employers.
Baldwin described the proposal:
Hardworking middle-class families can’t afford to have the financial industry and government creating a cozy relationship that allows Wall Street to write its own rules. We need to ensure that government officials are working on behalf of the public interest and our common good. The American people can’t afford to have government officials in the pocket of the financial industry that they are charged with overseeing….At a time of historic income inequality, we need to do everything we can to make sure we are building an economy that works for everyone. We can’t afford to have a revolving door working to stack the deck in favor of Wall Street and against hardworking Americans who are struggling to get ahead. The American people deserve to have trust in the fact that government is working for them and that the system is not being rigged against them.
Cummings added:
Those who accept the honor of public service must serve only the interests of the American people. “There is absolutely no reason that someone entering government service would need a payment from any outside source as a reward for that service or to incentivize favorable treatment—including from a previous employer—and no company would offer these payments if they didn’t yield some benefits to them. Our bill would make commonsense changes to strengthen ethics requirements for senior financial services regulators and procurement officials to avoid even the appearance of impropriety and possible conflicts of interest.
The AFL-CIO supports the legislation. Heather Slavkin Corzo, director of the AFL-CIO’s Office of Investment, said:
Working families deserve to know that they can count on financial regulators to protect them. For far too long the revolving door between Wall Street and federal financial regulators has allowed big corporations and Wall Street banks to have way too much influence on financial policies. How can the public trust that executives who received seven- or eight-figure golden parachutes from their former employers can properly regulate them?