Some of the biggest banks in the country pay executives multi-million-dollar awards for taking positions inside the government — and at least three of those institutions don’t want you to know about it.
According to a report by David Dayen (who is also an Al Jazeera contributor) posted online by The New Republic, Citigroup, Goldman Sachs and Morgan Stanley are seeking relief from the SEC on a shareholder proposal to force the banks to disclose who is eligible for government service rewards and how much those people stand to make. The AFL-CIO filed the proposal using its shareholder privileges.
“As shareholders of these banks, we want to know how much money we have promised to give away to senior executives if they take government jobs,” said AFL-CIO President Richard Trumpka in Dayen’s piece.
A valid concern — and a valid rationale for a shareholder, of course — but beyond the hit shareholders take from these golden parachutes, there is the broader effect this Wall Street move has on Main Street.
“It fuels the revolving door between banks and the government,” said Michael Smallberg, an investigator for the Project On Government Oversight, in TNR. And, as bank payouts are usually much higher than a government salary, it raises the question of where, when push comes to shove, allegiances would lie.
“With big awards by private firms for public service, the departing executive's interest will be aligned with the company paying them off, not with the general public they're meant to represent,” said Alexis Goldstein, communications director at other98.org, a grassroots nonprofit that organizes around economic issues. Goldstein tells Al Jazeera the “awards for public service are an implicit payment for access and information.”
Citigroup, for one, has paid mightily for this kind of influence — and have plenty of people in the current administration to access. The current Treasury secretary, a vice chair of the Federal Reserve and the U.S. Trade Representative all got exit payments from Citi when they left the bank for government appointments.
The payouts moved into the spotlight during the confirmation process for Antonio Weiss when he was up for the post of undersecretary of domestic finance in the Treasury Department. Weiss acknowledged in his financial disclosure forms that he stood to receive “$21 million in unvested income and deferred compensation upon exiting the company for a job in government.”
Because of revelations like that, Weiss was seen as too close to Wall Street and drew staunch opposition from some Democrats on the Hill, including Massachusetts Sen. Elizabeth Warren. The nomination was withdrawn, but Weiss took a job as counselor to Treasury Secretary Jack Lew, which does not require Senate confirmation. According to Dayen, however, the post probably still entitles Weiss to his $21 million.
“It's hard to forget a $21 million parting gift,” said Goldstein. Indeed. And, as Goldstein continued, it’s “hard to imagine the departing executive won't advocate for their former firm in their government role, even when it means Main Street's interests suffer.”