A coalition of eight progressive organizations, using material previously published at The Intercept, have challenged Hillary Clinton to disavow the use of “golden parachute” bonuses for former Wall Street executives who enter government service.
In a letter to the Clinton campaign delivered today, the organizations, including Rootstrikers, Democracy for America, CREDO and MoveOn.org Political Action, refer to two top aides to Clinton when she served as secretary of state, Thomas Nides and Robert Hormats. As The Intercept reported in July, Nides and Hormats received millions of dollars in golden parachute payments from their respective ex-employers, investment banks Morgan Stanley and Goldman Sachs, after becoming Clinton’s deputies.
Goldman Sachs paid out Hormats’ unvested restricted stock units, valued between $250,000 and $500,000. Morgan Stanley’s accelerated payout for Nides of restricted stock units was worth between $5 million and $25 million. Deferred compensation awards like these would have been forfeited, had the executives left their jobs for somewhere other than the government.
Bonuses are typically granted to executives who stay with a company rather than leave it. “Awarding outsized bonuses and gifts of equity to Wall Street executives who temporarily 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 progressive groups write to Clinton. They describe the practice as “a barely legal, backdoor form of bribery.”
In the letter, the groups ask Clinton if she supports the practice of golden parachute bonuses from the financial sector, and if she would allow officials in her administration to receive them.
The “Financial Services Conflict of Interest Act,” introduced by Sen. Tammy Baldwin, D-Wis., and Rep. Elijah Cummings, D-Md., would ban Wall Street golden parachute payments. The bill would also 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.
“Golden parachutes have become so common and corrosive to the public trust that it has become clear the next president should prohibit executive branch employees from receiving them altogether,” the letter concludes. It was also signed by American Family Voices, the Center for Popular Democracy, Friends of the Earth and The Other 98%.
Last month, Sen. Elizabeth Warren, D-Mass., publicly challenged presidential candidates to support the Baldwin/Cummings legislation. Bernie Sanders and Martin O’Malley, two Democratic hopefuls, have already endorsed it; Sanders is a co-sponsor of the bill. But the Clinton campaign has yet to make their position clear, prompting the escalation by these progressive groups.
“Americans are sick and tired of the Wall-Street-to-Washington revolving door, and are looking for a presidential candidate who will take concrete steps to fight it,” said Kurt Walters, campaign manager for Rootstrikers, in a statement. He added that hundreds of thousands of members of the undersigned organizations have signed petitions in support of the Baldwin/Cummings bill.
Nides, a six-figure bundler in Clinton’s former and current presidential campaigns, returned right back to Morgan Stanley after Clinton left the State Department. He has been touted for a potential chief of staff position in a Clinton White House. Hormats has been part of a small group of economic advisers to Clinton during her 2016 presidential run.
“It’s hard to imagine Democrats’ 2016 nominee will be truly tough on Wall Street banks that break the law,” said Charles Chamberlain, executive director of Democracy for America, “if they won’t commit to banning their advisers from receiving legalized bribes from those same banks.”