Baldwin and Cummings Introduce Financial Services Conflict of Interest Act

VIDEO: #RevolvingDoor press conference

WASHINGTON, D.C. – On the 5^th anniversary of the U.S. Senate passing Dodd-Frank, U.S. Senator Tammy Baldwin and House Committee on Oversight and Government Reform Ranking Member Elijah Cummings introduced the Financial Services Conflict of Interest Act, which will enhance the integrity of our financial regulatory system by mitigating the effects of the revolving door between industry and government. Senators Elizabeth Warren (D-MA) and Brian Schatz (D-HI) have signed on as original cosponsors of the Senate legislation.

“Hard-working 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,” said Senator Baldwin. “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. That is why I’m proud to join Ranking Member Cummings today to introduce the Financial Services Conflict of Interest Act. 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 hard working 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.”

“Those who accept the honor of public service must serve only the interests of the American people,” said Ranking Member Cummings.‎ “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.”

"Working families deserve to know that they can count on financial regulators to protect them," said AFL-CIO Director of Office of Investment Heather Slavkin Corzo. "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?"

“The nation has only now recovered from the financial meltdown that was largely caused by widespread failures in financial regulation. Banking interests themselves had penetrated deep within the ranks of the regulators,” said Craig Holman of Public Citizen. “We are again seeing regulatory capture by Wall Street, which could well endanger our fragile recovery. The Baldwin/Cummings legislation is desperately needed to prevent conflicts of interest and ensure that regulators represent the public interest.”

To slow the revolving door and help ensure that conflicts of interest do not erode the effectiveness of financial regulators, the Financial Services Conflict of Interest Act:

• Outlaws Bonuses for Government Work: The bill prohibits government employees from accepting bonuses from their former private sector employers for entering government service.

• Expands Cooling Off Periods and Tightens Lobbying Rules: The bill increases the prohibition on lobbying the federal government from one to two years and expands the definition of “lobbying contact” to include any lobbying activities and strategy. It also increases the current prohibition on federal examiners from accepting employment with any financial institutions they oversaw from one year to two years. It expands the prohibition to include supervisors, and it prohibits procurement officers in the federal government from working for companies that received contracts overseen by the procurement officers during their last two years in government service.

• Reduces Conflicts of Interest: The bill requires senior financial service regulators to recuse themselves from any official actions that directly or substantially benefit the former employers or clients for whom they worked in the previous two years before joining federal service.

The Financial Services Conflict of Interest Act is supported by: American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), American Federation of State, County, and Municipal Employees (AFSCME), Americans for Financial Reform, Center for Effective Government, Common Cause, Consumer Action, Government Accountability Project, Greenpeace, Institute for Agriculture and Trade Policy, James A. Thurber, Public Citizen, RootStrikers, and U.S. Public Interest Research Group (USPIRG).

Learn more about the Financial Services Conflict of Interest Act here.