Nail shut the revolving door between Congress and industry

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A House staffer whose job included drafting new rules for regulating derivatives (like the credit default swaps that sunk AIG) just left the House to go lobby for, drumroll please, a derivatives clearinghouse.

But Peter Roberson, who worked on the financial reform package for Barney Frank’s Financial Services Committee, just got a lot less useful to his new employer – ICE Trust, a clearinghouse with close ties to the largest derivatives trading banks.  

Frank blasted the staffer for his trip through the revolving door and barred him from any future contact with any members of the staff, for as long as he runs the committee. Frank’s statement said: 

Several people have expressed criticism of the move by Peter Roberson from the staff of the Financial Services Committee to ICE, after he worked on the legislation relevant to derivatives.  I completely agree with that criticism.  When Mr. Roberson was hired, it never occurred to me that he would jump so quickly from the Committee staff to an industry that was being affected by the Committee’s legislation.  When he called me to tell me that he was in conversations with them, I told him that I was disappointed and that I insisted that he take no further action as a member of the Committee staff.  

…I am therefore instructing the staff of the Financial Services Committee to have no contact whatsoever with Mr. Roberson on any matters involving financial regulation for as long as I am in charge of that Committee staff.  

Ethics rules bar such contact for only a year.  Frank’s outrage is the kind of reaction that we should see more often from members of Congress at the blatant conflicts of interest created when the revolving door between government and industry spins. 

Though Frank expressed the confidence that Roberson’s action was rare, it’s not as rare as he might hope. The New York Times found at least two other examples of Financial Services staff who jumped ship to work for the industry since the financial collapse began in 2008.

The panel’s deputy staff director, Michael M. Paese, left in August 2008
to be an executive vice president and the top lobbyist for the
Securities Industry and Financial Markets Association. He is now a
lobbyist for Goldman Sachs.

Later in 2008, another lawyer, Ricardo R. Delfin, left the committee for
the same trade association but moved on after only four months to a
position at the Securities and Exchange Commission. He
is no longer a lobbyist. Mr. Paese and Mr. Delfin said they could not

A former Treasury liason to the House Financial Services committee, Damon Munchus, left Treasury last month for the Cypress Group, a banking lobbyist and consulting firm. Not to mention the 24 people who used to work on the Senate Banking committee (including former members of the committee) and now lobby for financial firms, according to a Consumer Watchdog analysis of data reported at the Center for Responsive Politics and the Senate Lobbying Disclosure Act Database. (Download the report.)

We’ll never get real financial reform if the staff advising lawmakers (or members themselves) are busy auditioning for their next job on Wall Street. Both houses of Congress should enact tougher rules that don’t rely on the conscience of individual lawmakers to block such blatant conflicts of interest. Congressional staffers should be barred from working for the industries they oversee for at least two years – and Frank’s permanent ban on lobbying former colleagues should apply across the board.

Consumer Watchdog
Consumer Watchdog
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