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Groups Urge Senate to Support Sen. Grassley’s Efforts to Crack Down on Revolving Door at Financial Regulatory Agencies

May 17, 2010 

 

In a letter sent last week, the Project On Government Oversight (POGO) and several other groups urged the Senate to pass an amendment to the financial reform legislation to expose and slow the revolving door between financial regulatory agencies and the industries they regulate.

The revolving door has had a highly detrimental effect at agencies such as the Securities and Exchange Commission (SEC) in recent years, as employees frequently appear to take a lax approach to regulation in hopes of being employed by industry once they leave government. One recent investigation by the SEC Office of Inspector General (OIG) found that the former head of enforcement at the SEC's Fort Worth office—who had played a big part in delaying and limiting the investigation of the Stanford Ponzi scheme—sought to represent Stanford on three separate occasions after leaving the agency, despite repeated warnings and denials from the SEC ethics office.

An amendment introduced by Senator Charles Grassley (R-IA) would limit the harmful effects of the revolving door in several important ways. It requires that certain financial regulatory employees observe a "cooling off" period during which they will be prohibited from representing an outside entity before their former agency. It also requires financial regulatory agencies to maintain a registry of former employees who went on to represent outside clients before the agency. These registries would be posted online and made available to the public in a searchable form, providing an additional check on revolving door abuses.

"The revolving door has been spinning out of control at our financial regulatory agencies for years, raising serious concerns about the agencies' ability to protect the public from a future financial crisis," said POGO Executive Director Danielle Brian. "We need more transparency and accountability for regulatory employees who abuse the public's trust, and the Grassley amendment does exactly that."

The letter in support of Senator Grassley's amendment was signed by POGO and several other groups, including Common Cause, Consumers Union and Public Citizen.


Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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