Sen. Elizabeth Warren publicly challenged presidential candidates two weeks ago to support a bill intended to limit the revolving door between Washington and Wall Street.
The Financial Services Conflict of Interest Act would prohibit government officials from accepting “golden parachutes” from their former employers for entering public service.
Within days, Democratic candidate Martin O’Malley endorsed the legislation, and Sen. Bernie Sanders became a co-sponsor. But presumed Democratic front-runner Hillary Clinton has not said where she stands.
One possible explanation for Clinton’s lack of interest in banning golden parachutes is that she tolerated them when she ran the State Department — for two of her top aides. Robert Hormats and Thomas Nides previously worked as executives for financial firms Goldman Sachs and Morgan Stanley, respectively. Both received benefits tied to their Wall Street employment contracts for entering public service.
Hormats, who served as undersecretary for economics, energy and agricultural affairs from 2009 to 2013, was a managing director for Goldman Sachs for over 25 years. As he wrote in his 2009 letter to the Office of Government Ethics, “Before I assume the duties of the position of Under Secretary, Goldman Sachs will accelerate and pay out my restricted stock units, pursuant to written company policy.” Those unvested restricted stock units, which would have been forfeited had Hormats left Goldman for another Wall Street firm, are valued at between $250,000 and $500,000 on Hormats’ disclosure form.
Nides, a six-figure bundler in Clinton’s past and present presidential campaigns, worked for Fannie Mae, Credit Suisse and as a top executive at Morgan Stanley from 2005 to 2010. He became deputy secretary of state for management and resources in January 2011, replacing Jack Lew, who had himself received a golden parachute from Citigroup for entering government service. Nides received a payout on Morgan Stanley restricted stock units worth between $5 million and $25 million, according to his financial disclosure. His Morgan Stanley compensation plan “allows for acceleration of payout … if employee is required to divest of interest in order to comply with federal, state or local government conflict of interest requirements.”
Nides and Hormats are not alone in what has become a depressingly standard practice in recent years. But Clinton’s unusual control over staffing at the State Department makes her directly responsible for these particular golden parachutes, at a time when she wants to gain control over staffing of the entire executive branch.
“I would say these are textbook examples,” said Michael Smallberg of the Project on Government Oversight, which has closely followed this issue. “I would raise concerns on how these payments affect the officials’ views, not only toward their former employers but the industry more broadly.”
Sometimes Wall Street firms tie bonuses explicitly to entering government, as in Jack Lew’s case. But often the inducement to executives is subtler, as through accelerating their deferred compensation, which would be forfeited if they joined a rival.
Deferred compensation takes a long time to vest and is used to keep executives from leaving their firms. But several companies have explicit policies, described in their SEC disclosures, that allow unvested stock options and other deferred benefits to automatically pay off if executives leave for government service.
In the wake of the Enron scandal, when executives siphoned $53 million from their stock plans before the company collapsed, a 2004 tax law banned the acceleration of deferred compensation. But Congress made an exception for public service. This makes it easier for private-sector candidates for executive branch positions to divest from their firms and comply with federal ethics laws.
Critics charge that this incentive leads to a disproportionate number of former financial executives in policymaking positions. “It’s a subtle effort at regulatory capture,” said Craig Holman of Public Citizen, who has endorsed the legislation to ban golden parachutes. “It’s about making sure the regulator has a positive view of the bank, making sure they have the obligation of indebtedness.”
Clinton did not force her aides to give up these accelerated payments, unlike President Obama, who did ask his now-U.S. Trade Representative Michael Froman to surrender the $4 million in bonuses he received from Citigroup for joining the government. As secretary of state, Clinton fought to choose her own staff, bringing in several campaign loyalists, including these former Wall Street executives.
When Clinton left the State Department, Nides returned to Morgan Stanley as a vice chairman. He is reportedly a leading candidate for a high-level position in a Hillary Clinton White House. “The fact that (Nides) came from Morgan Stanley, went back, and is now rumored for a senior position shows how concerns about the revolving door aren’t just hypothetical,” said Smallberg. Hormats, also a fundraiser for Clinton’s prior presidential campaign, now works for Henry Kissinger’s consulting firm.
Progressive groups find Clinton’s association with Nides and Hormats concerning. Nides once served as chairman for the Securities Industry and Financial Markets Association, one of Wall Street’s top lobbying groups and a fierce opponent of the Dodd-Frank financial reform. He also helped then-president Bill Clinton sell NAFTA to Congress in 1993. Hormats, an advocate for Social Security privatization and deregulation of the financial sector, was part of a small group of economists and policymakers who met with Clinton last December to discuss her campaign’s economic strategy. He has been called Clinton’s “economic guru,” and used his position at the State Department to advocate for U.S. multinationals.
The Clinton campaign did not respond to repeated requests to clarify their position on the Financial Services Conflict of Interest Act, or to address concerns about Nides, Hormats and their golden parachute payouts.
In addition to banning golden parachute payments, the bill, introduced by Sen. Tammy Baldwin, D-Wisc., would extend the lobbying “cooling-off” period for officials rotating out of government from one to two years, and force policymakers to recuse themselves from decisions that would benefit their former employers.
Warren issued her dare during an address to progressives attending the annual Netroots Nation convention. “It’s a bill any presidential candidate should be able to cheer for,” she said. “We don’t run this country for Wall Street and mega corporations, we run it for people.”
Kurt Walters of Rootstrikers, a progressive anti-corruption group that has endorsed the revolving door bill, said Clinton “should give a clear answer on whether she still believes it’s okay for Wall Street executives to receive golden parachutes worth millions of dollars for going into government positions.”
Two other Democratic presidential candidates, Jim Webb and Lincoln Chafee, also declined to comment on the legislation. Republican candidate Jeb Bush has proposed extending the lobbying ban for members of Congress to six years, though he did not include executive branch officials in that prohibition.
Clinton has attempted to disassociate herself from the banking industry in recent speeches, decrying “quarterly capitalism” and promising crackdowns on financial fraud. In a Facebook chat last week, she vowed to appoint “tough, independent-minded regulators.”
But her history with Nides and Hormats “complicates Clinton’s statements about Wall Street and her ability to distance herself from powerhouse firms,” Smallberg said. Holman, of Public Citizen, said Clinton could help herself by endorsing the revolving-door legislation. “She’s got a real image problem,” Holman said. “If she were to support this bill, it would go a long way.”
This week, Martin O’Malley criticized Clinton’s Wall Street ties in a radio interview in New Hampshire. “Her closeness with big banks on Wall Street is sincere, its heartfelt, long-established and well-known,” O’Malley told Concord News Radio. “I don’t have those ties. I am independent of those big banks on Wall Street.”
Hillary raked in $10.3 million for speeches in 2013 alone. $1.6 million of it was from big banks. Is she going to bite the hand that feed’s her? (figures from democracynow 8/3/15.
In regard to the photo at the top –
Putting the image of a smiling predator from the Cretaceous period coming
towards me is quite disturbing!
A dinosaur in a pant-suit still has a dinosaur’s appetite.
Sanders / Warren
THIS is the winning ticket
Sanders and Warren and O’Malley or whoever is a member of the democrat
version of corporate capitalism’s several parties are mainly there to keep
people from doing what needs to be done to abandon this corrupt system.
They are, at best, hypocrites who say lots of populist words while
reinforcing the current corrupt system by making people believe
that they will transform a venomous snake into a songbird by feeding it.
Warren is a prime example of their fraudulence.
She has a undeserved reputation for creating a watchdog agency,
the Consumer Financial Protection Bureau (CFPB),
which was and is SUPPOSED to be outside of the corrupt machinations
of Wall Street, BUT
she went into the white house to set it up
and what she set up was a pretense which was put under the control of the
agents of Wall Street. A fake watchdog which is actually a lap dog for the
financial schemers.
For doing this betrayal which she should have denounced (if she is serious)
she was offered a seat in their country club (the senate).
She is still using words which have little connection to what she is
actually part of.
The US Government is a joke and the people are powerless to stop this corruption. How far we have come since the founding fathers created the constitution.
Hilary’s campaign is like a Sienfiled show. It’s a campaign about nothing.
Sanders/O’Malley !
Golden parachutes get the firms off keeping these new “government” employees on their payrolls. A one-time payout makes corporate influence exceedingly cheap.
Hillary is on the wrong side of too many issues.
I think these two reasons are like #1001 and #1002.
This excellent article reminds me of a blog post running along similar lines over at Nakedcapitalism.com:
http://www.nakedcapitalism.com/2015/07/gaius-publius-the-rorschach-candidacy-of-hillary-clinton.html
(And excellent comment following the article — and no, not mine — from commenter, Ishmael — really nails it on Hillary Clinton and family.)
So Hillary wants to be a populist and create jobs for the middle class. What most people seem to miss that specifically when the Clinton Administration negotiated the trade agreement for China US manufacturing (can you say middle class high paying jobs) were specifically thrown under the bus and in return US financial institutions were given access to China (Robert Rubin ie Mr. Goldman Sachs and Citicorp). I looked at that when it was happening and thought that is idiotic – financial institutions in China will hire Chinese workers while we lose hundreds of thousands of middle class jobs. Tell me do you think this caused the spread between rich and poor to grow much larger. Not only were middle-middle class jobs were lost but tens of thousands of upper middle class jobs were lost through this.
The author seems to wonder if Hillary will be friends to the upper class to help the vast majority but I think it is far more likely that she will throw a few crumbs to the middle class (maybe increase the SNAP benefits) while lining her contributors pockets and her, Bill and Chelsea will suck down the Veuve, eat caviar and fly around in a 747. That is the way of the top leaders in socialist countries – the masses get a few crumbs while the aristocrat live the high life.
You can google Hillary Morocco phosphate and come up with a number of stories about those contributions. Here’s one.
https://firstlook.org/theintercept/2015/04/22/inside-morocco-clinton-influence-campaign/
Short of accepting blood diamonds from the Taylors of Liberia and shooting a popular lion, this is pretty vile African cash-for-support activity.
No surprise here. Vote Bernie 2016!
If Bernie doesn’t get the nomination, consider voting for Jill Stein.
I completely agree with you! Before i started discovering and listening to Sanders, i was set on a green party candidate in 2016.
Have you noticed that Steve Harvey wears the same type of pantsuit that Hillary Clinton does? Well, it’s true.
I draw your attention to this, from the wikipedia page for the Securities Act of 1934.
Under the Act, corporate insiders include corporate officers and directors, and holders of 10% or more of stock, and any trades they make carry considerable scrutiny. (See wiki page on insider trading). Maybe Hillary’s new friends don’t quite reach that level but it bears watching.
Hillary for president in the middle of Cold War 2.0
A nightmare scenario
http://bit.ly/1FBWwLb
Have you noticed that Steve Harvey wears the same type of pantsuit that Hillary Clinton does? Well, it’s true.
Well, he’s a little bit taller …
The revolving door is an obscenity that has compromised what little integrity the government had. From biotech to weapons to agribiz to oil, government is now rife with people whose loyalties are to the corporations. It should be illegal. Hillary is so utterly toxic, and of course she is for the revolving door. She never saw a dollar she didn’t love, but helping people…very low on her priority list if it’s there at all.
I don’t get it.
Does the legislation anticipate corporate executives would simply lose those deferred payments or would the deferred benefit remain dormant until public service ended and the executive returned to private life? If the former, it would likely preclude their public service. If that’s the objective, why not just ban the practice outright? If the latter, it’s difficult to see how the inherent conflict of interest is mitigated.
That’s because the bill actually says zero (0) words about deferred salary and bonuses. Deferred payments are part tax dodge by their recipients and part retention policy by corporations. But they are actually money already “earned” to the extent that some executive salaries are really earned at all. So they actually don’t really fit the definition in the bill of “bonus or salary” paid for “services rendered or to be rendered” while a government employee.
The only other part of this bill that would affect the two figurehead “transgressors” in Dayen’s article (Hormats and Nides) is the provision that precludes negotiating a future position that involves the same kind of quid pro quo and requires reporting any job negotiations with the private sector to document that. If someone can show that Nides, who returned to Morgan Stanley, negotiated his return in return for favorable positions on issues, then he transgresses there.
But the whole reason why payment of deferred compensation that isn’t vested is banned is to prevent corporate execs who know they’re on a sinking ship from cashing out with all the company’s assets and leaving no final paychecks for the floor workers. So because that would preclude, as you have said, these people from serving in the government because of the losses they’d need to take to do so, Congress specifically authorized such payments in the case where the exec was leaving to do public service.
The Baldwin-Cummings bill that Warren endorses doesn’t change that. There’s a requirement of the money being “for services rendered or to be rendered”, not a blanket ban, and most assuredly not a ban on accelerating vesting of deferred payments.
If David Dayen and like minded people here want to completely ban rich corporate execs from working in the government altogether, they should say so, and we’ll see whether Elizabeth Warren will endorse that. Maybe we should. But that’s not what’s on the table.
It should also be noted that Congress authorized the SEC to investigate trading on insider information of legislation before Congress, and then told the SEC it was immune from complying with subpoenas for information for those investigations under the Speech and Debate Clause. Revolving doors are always easier to attack when they’re in somebody else’s building.
Given the “work” they actually performed, I’m not at all convinced it qualifies as “public service”.
“Working in the government” and “public service” have different meanings.
As for those likeminded people, the concern isn’t the wealth or the incorporation of the business, but rather how that wealth was acquired and the company they’ve kept. Executing fraud while avoiding jail shouldn’t be in the required experience section of any job description in our government.
Fair enough, you’re opposed to all people from which sector being banned from government, or is it what position they held? It’s a valid point of view, it can very well be that being manager of a hedge fund, or a quant or something like that should disqualify you from public service. That isn’t this bill, but do you think it should be? (FYI: I’m undecided on that, but it does have some merits)
It’s not the sector or the title, it’s the criminality.
Unfortunately, it was widespread throughout the finance sector, so your generalization is only off by a bit.
I think you have more to prove, don’t you David? The bill, as written by Baldwin and Cummings, prohibits bonuses or salaries for “services rendered, or to be rendered” to the corporation while serving in a government position. Just paying out deferred compensation without the proof that there’s any quid pro quo required by the bill being endorsed by Elizabeth Warren, isn’t illegal at all, not now, and not if the bill passes.
Typical FDL sloppy “follow the money” bullshit.
Ondelette hates FDL because he made an ass of himself in comments there, kept getting voted down, and then he libeled Kevin Gostolza on the topic of rape.
I’ve participated at FDL maybe 3 times in my life. But I discovered all this when Ondelette again said something nasty about Gostalza in comments at The Guardian. I researched it and found out he was totally lying, and was pretty much loathed over there.
Some years ago when Greenwald was at Salon, he called Ondelette an “embittered liar.” Ondelette inspires antipathy everywhere he goes and learns nothing from this fact.
It’d be nice, Mona if you’d try to know what your talking about before you open your trap? You know shit about FDL and me. And you may have learned how to attack the character of others in law school, but you certainly didn’t learn much about how to understand what other people are actually saying.
Facts are facts, Mona. Go read the Baldwin-Cummings bill, and get back to us on whether or not it bans accelerating deferred payments. That David isn’t bright enough to figure that out shouldn’t be an invitation for you to erupt in ad hominems, you wretched embittered liar.
And yet another data point why I will never cast a vote for Hillary Clinton in either the primary or general.
Not to go all Yoda, but “Hillary is not the change you seek. You should go home and re-evaluate your priorities if thinking of voting for Hillary you are. Good relations with the Wookies, has Hillary. To be a Jedi is to face the truth, and choose. Give off light or darkness. Be a candle or the night.”
For all that, one of her worst hires was a career State Department warmonger: Victoria Nuland.
Victoria Nuland? Former Dick Cheney defense policy advisor? Wife to founder of Project For A New American Century (PNAC), Robert Kagan?
Now why ever would you say that? /sarc
This article is rather typical of liberal misrepresentation of reality.
It is actually more a democrat advertisement than anything else.
Clinton “tolerated” this corruption like a shark tolerates blood.
The promotion of a bill which clearly has no chance of passage with
real teeth is another liberal democrat form of posturing. No matter how many
democrats say they support this idea, the reality is that the corporations
which own that party and its colleagues in the republican branch of the
corporate state will again benefit from the posturing.
O’Malley is not being honest when he says he is “independent” of the big banks
because every democrat belongs to a party which is controlled by
Wall Street and their last convention in Charlotte, North Carolina was an
homage to the very anti-union hometown of Bank of America and was
funded by a “loan” from Duke energy.
If he and his colleagues really think that “loan” was impartial charity,
then they have less intelligence than I had imagined.
Finally, the impression is given that Obama is opposed to these
payments because he asked Michael Froman to give up $4,000,000
in bonuses. The truth is that Froman received much more for being a
part of the corrupt administration. According to Lee Fang, Froman received a
$9.000,000 “bonus” and the previous payments were to some extent put in
his wife’s name.
This article belongs at “the Nation” with the rest of the squintingly deceptive
garbage they put out to keep the voters from leaving the corporate
storage units.
No liberal misrepresentation here, only Democrat lies. The Democratic Party does not represent American liberals.
It is impossible to define a standard of difference between “liberal” and
“progressive” and that impossibility is what the democrat corporate fronts
depend upon, but I am guilty of no longer being able to differentiate
between neo-liberal, neo-conservative, and liberal because they are
all connected now to corporate control of all life.
The democrats are now republicans who lie about what they support
and who they work for.
So, yes,
there is no “liberal misrepresentation here” in as far as the democrats
continue to be portrayed as liberals while they misrepresent their agenda
and lie, steal, and murder
with their beloved republican colleagues.
There is a difference between liberals and progressives. Liberals actually stand up for what they believe in. Progressives don’t stand for anything and just try to pander to liberals, all the while being too afraid to actually refer to themselves as “liberal”. They’re generally okay with certain liberal social issues, but complete frauds on the economic issues. On economic issues, they’re 3rd way neoliberal corporatists all the way.
Your knowledge of both the English language and American history appears nonexistent.
Suggest you read up on Eugene Debs, Emma Goldman, Alexander Birkman, the McNamara brothers, Jack London, et al.
Then get back to us . . .
I do not agree with your interpretation.
My disagreement is based upon the fact that most democrat voters
consider themselves “liberal” and/or progressive and they are neither.
I actually think that the word “liberal” is code for a level of affluence.
It’s DEMOCRATIC, not “Democrat”. Use the word properly and maybe we’ll listen to what else you have to say. You don’t type the “Republic” party, do you? Then why the “Democrat” party? I’m not a Democrat and I can’t stand either party (they’re both the same party; the corporate party), but I really hate the way Conservatives have twisted the word “Democratic” to “Democrat”. Why? Because it makes everyone saying it sound like a total moron. There’s your lesson for the day, Clark.
Hillary, Bernie, Elisabeth, the fat cat bankers, wall street, fox news, the media, our government, all of these folks are Zionists…They do not work for America or Americans they work for Israel. They pretend to oppose each other but they are all united in support for the Jewish theft of Palestine and the Jewish persecution of the Palestinian people. They all supported these illegal wars, they all supported the bailouts, they all support corporate welfare, none of them will go after companies that hire illegals, none of them will prosecute war criminals or torturers, none of them will end these wars or end the slaughter of innocent Muslims. This election is a farce, we are only allowed to vote for candidates who are preselected by the conservative ruling elite. Every word that comes out of these candidates mouths is garbage.
Where, oh where, is Louise Cypher, now that we need her? (Talk about conspiracy theory antisemitic rants!)
Should read ‘We’re not supposed to run this county for Wall Street and mega corporations, but of course, we do…
Glad to see The Intercept covering the corruption of election candidates such as Hillary Clinton and most of the Republican front-runners. Another good thing TI could do though would be to give third party candidates such as Jill Stein some news coverage as well, as the Establishment news media so often ignores candidates who run outside the so-called Two Party System. The lawsuit over the Commission on Presidential Debate’s inclusion criteria would, I think at least, make a good topic for an article.
Anything you recommend reading re: that lawsuit?
Here’s a good article to start with:
http://www.truth-out.org/speakout/item/30240-our-america-initiative-will-sue-commission-on-presidential-debates
“How can you have your pudding, when you can’t eat your meat?!”
“If you don’t eat your meat, you can’t have any pudding,
“How can you have any pudding if you don’t eat your meat!”
All in all the third parties are just bricks in the wall.
The system is corrupt. It matters little what bricks you place in the wall for the wall still stands.
There is a slow train coming and it is not a party
Sometimes I feel so low-down and disgusted
Can’t help but wonder what’s happenin’ to my companions
Are they lost or are they found?
Have they counted the cost it’ll take to bring down?
All their earthly principles they’re gonna have to abandon
And there’s a slow, slow train comin’ up around the bend
I had a woman down in Alabama
She was a backwoods girl, but she sure was realistic
She said, “Boy, without a doubt
Have to quit your mess and straighten out
You could die down here, be just another accident statistic”
And there’s a slow, slow train comin’ up around the bend
All that foreign oil controlling American soil
Look around you, it’s just bound to make you embarrassed
Sheiks walkin’ around like kings, wearing fancy jewels and nose rings
Deciding America’s future from Amsterdam and to Paris
And there’s a slow, slow train comin’ up around the bend
Man’s ego is inflated, his laws are outdated, they don’t apply no more
You can’t rely no more to be standin’ around waitin’
In the home of the brave, Jefferson turnin’ over in his grave
Fools glorifying themselves, trying to manipulate Satan
And there’s a slow, slow train comin’ up around the bend
Big-time negotiators, false healers and woman haters
Masters of the bluff and masters of the proposition
But the enemy I see wears a cloak of decency
All non-believers and men stealers talkin’ in the name of religion
And there’s a slow, there’s a slow train comin’ up around the bend
People starving and thirsting, grain elevators are bursting
Oh, you know it costs more to store the food than it do to give it
They say, “Lose your inhibitions, follow your own ambitions”
They talk about a life of brotherly love
Show me someone who knows how to live it
There’s a slow, slow train comin’ up around the bend
Well, my baby went to Illinois
With some bad-talkin’ boy she could destroy
A real suicide case, but there was nothin’ I could do to stop it
I don’t care about economy, I don’t care about astronomy
But it sure does bother me to see my loved ones turnin’ into puppets
And there’s a slow, slow train comin’ up around the bend
Songwriters
BOB DYLAN
I still think it’s better to try to do SOMETHING constructive rather than wallowing in pity (in response to your own comment, that is; the Bob Dylan song was good). Yes, the system is corrupt, but barring a massive millions-strong revolution (preferably non-violent), it’s not going to be changed except from honest candidates finally getting elected into office and continuing to have the decency and courage to try to change it. In a sense, a return to the multi-party politics of the days before the 1950’s would in itself be a non-violent revolution.
Fair enough Joshua. Your words have wisdom that this bitter old man can see.
Change is required and any change must surely be better than the samo samo.
I wish you well and if change can come so be it.
I just have a feeling that the third party will still be a party of different but like ilk.