It’s not just Congress that can raise the ethical bar
This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.
If you’ve followed the Revolving Door Project for any length of time, you will be aware that we believe the Biden administration and the Democratic party need to fight harder for the public interest and do much more to ensure the public is aware of its efforts. Specifically, it is core to the project’s theory of politics that successful political leaders must not only govern effectively, but drive attention to their work by creating conflict. You can see this thread weaving through almost all of our work, but various members of our team have articulated it most clearly here, here, and here.
Over the last week, we’ve been delighted to see several others echo these themes. In a Twitter thread, Ezra Klein argued that just taking popular stances isn’t enough, “you also need *controversial* stances” because “the energy of controversy is what generates attention.” In The Washington Post, Jennifer Rubin noted that Biden’s “low approval ratings suggest the voters are unimpressed with his efforts to make nice with Republicans” and argued that he’ll need to stop “flatter[ing] Republicans” to “rally the base.” Way to Win’s Leah Hunt-Hendrix wrote in Politico that, “If Democrats want to succeed in November, they need to tell a story about how to secure broadly shared prosperity and justice for all. That requires calling out those who are working against this vision for the sake of private profit and personal gain — not shunting aside some of the most vulnerable, and loyal, members of the party.”
Now that we know a copy of The American Prospect (where we’ve repeatedly made these arguments) has periodically been spotted in the Oval Office, we’re hoping that we hear the White House’s voice join the chorus sometime soon! Already, it would seem that the Consumer Financial Protection Bureau, which yesterday announced action against Transunion and one of its senior executives, is taking to heart our advice to name specific corporate villains.
Ethics in Government
After a series of pandemic-era stock trading scandals brought public trust in Congress to new lows, lawmakers are considering measures to clean up their collective acts. Last week, the Committee on House Administration held a hearing to consider many of the proposed ethics reforms that congress members have introduced in recent months. Those include a ban on trading for members (and spouses and dependent children in some proposals), a ban on stock ownership, standardized rules for Congress, the executive branch, and the judiciary, and more. Over the coming weeks, lawmakers are set to craft a singular reform package from these various pieces. For the blog last week I argued that, as they do, they should heed lessons from the Federal Reserve’s recent ethics scandals in addition to their own. Looking at events at the Fed underscores that disclosure-based ethics regimes are insufficient, that independent enforcement is key to ethical integrity, and that ethics rules must cover even obscure positions of public trust.
While we certainly hope to see Congress pass strong ethics reforms, we are not just looking to new legislation to improve federal ethics standards. President Biden has considerable authority to impose new ethics restrictions across the executive branch. In a new piece for The American Prospect Timi Iwayemi and I argue that Biden should use that authority to shut the revolving door from his administration to the cryptocurrency industry. That door has been spinning at a dizzying pace in recent years as crypto seeks to influence the regulatory process in its favor. To safeguard public trust in his administration’s regulatory work, we argue that Biden needs to “cut off the crypto industry’s access to the most up-to-date, inside knowledge of the federal government’s crypto-related deliberations” and “ensure that those who are working on crypto policy have the public interest, not the prospect of a lavish salary in the industry, as their guiding star.”
Personnel
Needless to say, we also think that Biden should shut the revolving door from the crypto and fintech industries into his administration. Until recently, that seemed like a somewhat less pressing threat. News yesterday, however, that former Treasury Department official Michael Barr is the frontrunner to be the Federal Reserve’s Vice Chair of Supervision has changed that. For those in need of a refresher, Barr:
“was an advisor and legitimator for Ripple, an unregistered security posing as a cryptocurrency… [a] part of a network of advisors to NYCA Partners, a venture capital fund that brings Wall Street and Silicon Valley together to carve up Americans’ finances via regulation-dodging fintech apps”…and a former board member of “the Ripple- and fintech-funded Alliance for Innovative Regulation, a think tank which has called for throwing out almost everything which keeps our financial regulatory system accountable to the public, such as FOIA law and public comment periods, and replacing it with surveillance technology.”
As our Executive Director Jeff Hauser said in his statement on the nomination, “Barr can’t be trusted to make enemies of the old banks or the new fintechs when necessary for the safety and soundness of the financial system. We need a VC-S who looks out for the people and the economy, not for his own career.”
As it so happens, we could also use a Commerce Secretary who is looking out for the people. Unfortunately, Gina Raimondo’s efforts to shield the Big Tech giants from European regulators and her subsequent failure to respond to repeated requests from lawmakers and advocacy groups for greater transparency call her commitment to the public into question. This week, we led a coalition of 14 groups in sending a letter to the Senate Judiciary committee asking that it “take a closer look at Raimondo’s ongoing effort to obstruct visibility into her conduct.”
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:
Biden Must Block Crypto’s Access to the Revolving Door
How Biden’s HUD Can Tackle The Housing Crisis
Want To Show That Dems Have Learned Nothing Since 2008? Give Michael Barr A Fed Seat
The Stakes Are High For The EPA’s Newly Appointed Chemical Review Director
Congress Should Heed the Lessons from the Federal Reserve’s Ethics Scandals
Commerce Secretary Gina Raimondo Won’t Disclose Whether She Met With Big Tech, Watchdogs Say