Obama Administration asked to adopt policy of renouncing ‘government service golden parachutes’

By Thomas G. Wolfe, J.D.

In a recent letter to the White House, 28 different civic, public interest, and union groups have jointly urged the Obama Administration to implement a policy requiring new officials coming from the financial industry to relinquish their “government service golden parachute” compensation packages that are offered by their former private employers “in exchange for their decisions to enter into public service.” The groups’ Oct. 22, 2015, letter to the President maintains that these golden parachute arrangements are “corrosive to the public trust” and that the Obama Administration should require any new administration officials to “forego them as a condition of employment.”

As observed in a release by Public Citizen, one of the 28 signatory groups to the joint letter, former Wall Street officials have “taken on a number of high-level roles in the executive branch” in recent times. Public Citizen points out that “[a]lumni from Citigroup” head the U.S. Treasury Department and the Office of the U.S. Trade Representative. Similarly, “other former executives and representatives of major banks serve as senior economic policymakers and federal regulators overseeing their former employers,” Public Citizen notes.

Consequently, according to Public Citizen, the groups’ letter to the White House seeks to “slow the revolving door between Wall Street and the government by ensuring that new federal officials don’t get extra pay from the financial industry just for taking a government job overseeing the financial industry.”

In their joint letter, the groups assert that awarding “outsized bonuses and gifts of equity to Wall Street executives who 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.”

Moreover, the groups contend that, at best, the current practice “creates the appearance of corruption and conflict of interest.” At worst, the practice “results in undue and inappropriate corporate influence at the highest levels of government—in essence, a barely legal, backdoor form of bribery.”

Accordingly, the letter exhorts the Obama Administration to adopt a policy of requiring new officials from the financial industry to relinquish their “government service golden parachutes” to restore the public’s trust in government.

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