The "revolving door" between lobbying interests and both Congress and administrations is a constant source of concern for CREW. Last year, we issued a report titled, Revolving Door, which documented how, after leaving their government positions, top officials in the Bush administration "joined the ranks of the companies they once regulated where they are highly compensated."
The door revolves between the Securities and Exchange Commission (SEC) and the financial services industry. That "raise[s] questions about the effectiveness of the enforcement division at the Securities and Exchange Commission," according to Peter Henning at the NY Times blog "White Collar Watch":
The S.E.C., like any government agency, loses staff to the private sector with great regularity. Under applicable government rules, a former staff member cannot represent a client in a matter on which that person worked while at the agency. Former S.E.C. staff members who were not at the most senior levels must file a disclosure statement with the commission’s ethics office for two years after leaving for any matter in which they will appear.
According to The Wall Street Journal, 66 former S.E.C. employees filed letters disclosing representation in securities matters in 2008 and the first nine months of 2009. Even after that two-year period is up, former staff members still have personal relationships with many of those still working at the S.E.C. For senior officials who leave for the private section, they can offer their access to the upper echelons of the enforcement division for years.
The recent disclosure of the S.E.C. inspector general’s report on the investigation of Allied Capital presents a picture of former officials, including the former director of enforcement, seemingly exerting their influence to slow down a potential securities fraud suit against the firm. The report quotes one staff member who worked on the investigation as describing a meeting at which Allied Capital was “heavily, heavily armed” — since the presence of a former enforcement director makes a distinct impression. Shortly after the meeting, a decision was made to scale back the case to an administrative proceeding against Allied Capital in which no penalties were imposed.
The "revolving door" seems to work well for the lobbyists, but not so well for the rest of us.