By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently researching a book about textile artisans. She also writes regularly about legal, political economy, and regulatory topics for various consulting clients and publications, as well as scribbles occasional travel pieces for The National.
It will not surprise regular readers to hear some of the latest news concerning the revolving door between government “service” and private sector employment. I post this short piece not because I think there’s any chance that anything will be done anytime soon to stop such “swinging” from occurring– but because I think it’s worth noting that it continues to occur.
One thing that’s important to note: the door swings both ways. Although Trump promised to “drain the swamp”– and slammed Hillary Clinton during the campaign for her Goldman Sachs connections– he lost no time in turning to vampire squid denizens in staffing his administration (as has indeed, been widely reported. See, for example, these Naked Capitalism posts: Trump Picks Ex-Goldman Banker, Steve Mnuchin, Known as ‘King of Foreclosures’ to Head Treasury and Trump Selects Jay Clayton, S & C Partner, to chair the SEC.)
Nonetheless, my interest was piqued by a recent New York Time Dealbook piece discussing the revolving door phenomenon, Ex-Obama Officials Find There’s No Place Like Their Old Law Firms. Now, as those who pay occasional attention to Dealbook well know, one key indicator of whether a phenomenon has jumped the shark is whether it’s attracted Dealbook’s attention. So while bearing that caveat in mind, allow me to quote from that source;
When a new administration comes to Washington, top government regulators flock to the exits to find new jobs, but they seldom have to look very far.
A few parlay their experience into corporate counsel jobs or trade up to a more rarefied law firm than the one they had left earlier.
Please note that I’m not immune to arguments that those who spend years studying law– and usually, accruing substantial student loan debts, which, incidentally was even true when I attended law school– class of ’91– should get some return on their investments of time, energy, and toil. Sadly, the US fails to well compensate lawyers (and other professionals) who elect to take public service jobs. Contrast that with Singapore– where there is a clear, well-compensated career path available to those who choose government service. Such a system stops any revolving door from swinging. But that’s certainly not the case in the USA. And the failure to compensate government lawyers, means that the lure of private practice always looms large. But I can and do lament that this is the case.
The Big Dogs Go Back to Their Very Comfortable Kennels
Let’s start with one of the biggest administration dogs who actually practised any law before his latest round of federal government service, former attorney-general Eric Holder. He’s the progenitor of the eponymous “Holder doctrine”, under which the Department of Justice (DoJ) eschewed pursuing criminal charges against companies and executives for their crimes and misdeeds and instead opted for negotiated settlements that included minimis, slap-on-the wrist penalties. I’ve written about this issue at greater length in The Obamamometer’s Toxic Legacy: The Rule of Lawlessness and elsewhere. In return for these and other services rendered, after his DoJ stint, Holder returned to his cushy partnership at Washington, D.C. firm Covingtom and Burling.
I’ve also written before about Mary Jo White’s lackluster performance as SEC chair, and described how her actions left a weakened SEC primed for Trump appointees to weaken further, Mary Jo White Leaves Behind a Weakened SEC for Trump to Weaken Further. She certainly didn’t take any actions during her tenure that would ruffle any feathers and prevent her from easily gliding back to her partnership at white shoe law firm Debevoise & Plimption.
The Revolving Door Continues to Spin
The Holder and White loop de loops are not just the only such examples, with the Wall Street Journal reporting last week, Former SEC Director Higgins Rejoins Ropes & Gray:
Keith Higgins, the former director of the Securities and Exchange Commission’s Division of Corporation Finance, rejoined law firm Ropes & Gray LLP, the firm said on Thursday.
Mr. Higgins will serve as chair of the firm’s securities and governance practice in Boston. In this capacity, he will serve as a special advisor on governance and disclosure matters, and will be a resource to Ropes & Gray’s government enforcement and business and securities litigation practices, the firm said.
Mr. Higgins led the SEC’s Division of Corporation Finance, which reviews financial filings and ensures companies hew closer to regulations, from May 2013 to December 2016. Mr. Higgins resigned a little more than a month before former SEC Chairman Mary Jo White left the agency.
Allow me to note for the record some other examples of how the door revolves, as per the Dealbook article cited above:
In the latest high-profile transition, the law firm Zuckerman Spaeder has welcomed back Aitan D. Goelman, who was enforcement director at the Commodity Futures Trading Commission [CFTC] until February. In his regulatory role, Mr. Goelman oversaw cases using new enforcement powers authorized by the Dodd-Frank Act and other legislation that grew out of the 2008 economic crisis.
Goelmann won’t need to spend much time boning up on the issues he’ll address in his new role, as they’ll be the same types of matters that crossed his desk at the CFTC, e.g. “the securities, commodities and derivatives industries, internal investigations and defense of cross-jurisdictional regulatory and criminal matters.”
And Dealbook lists other examples as well:
As the Obama administration wound down, major firms stepped up their efforts to grab other star lawyers — the kind who have gone toe-to-toe with corporate attorneys and won.
Some corporations reach into government ranks and hire directly. PepsiCo hired Tony West, who was the associate attorney general in the Justice Department, as its general counsel in November 2014.
More routinely, top-tier firms embrace departing regulators, especially those with experience in securities and foreign corrupt practices law.
Cybersecurity is the latest hot commodity, said Jeffrey A. Lowe, the partner practice group leader at the legal search firm Major, Lindsey & Africa.
The Bottom Line
I’m not trying to suggest there’s anything unique here– nor particularly out of bounds nor ethically challenged. To quote Michael Kinsley (IIRC), “the scandal isn’t what’s illegal, the scandal is what’s legal.” But it’s just to remind readers that the Trump administration didn’t invent conflicted, problematic behaviour, such as the revolving door.
Allow me to conclude with more of the obvious, as again, per Dealbook:
The revolving door between government and law firms is decades old, as the newest political overseers arriving in Washington recruit their own legal hands for savvy counsel to prevent — or rescue them from — misdeeds or mistakes. And, as white-collar practices at major law firms have been booming in the wake of the regulatory overhauls that followed the economy’s 2008 crisis, that swinging door typically means a big payday for most lawyers.
Payday for them, sure. But at whose expense?
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I don’t read dealbook but I’m sure they missed Jamie Gorelick hiring back her own USDOJ US ATTORNEY Ron Machen Jr. https://www.justice.gov/opa/pr/schlumberger-oilfield-holdings-ltd-agrees-plead-guilty-and-pay-over-2327-million-violating-us
Jamie cut side deals with Iran as Director of Schlumberger from 2004-2009 while also advising Bush, the USDOJ, USDOD, NSA, CIA, IRS, EPA and FBI. (That’s 6 years wartime Treason with the enemy).
Nobody noticed, not even the US Senators that were hired to the USDOJ by Jamie before they became Senators and before she went to Schlumberger and surely followed her career.
Slipped their mind.
I get the impression the Obama administration people who left early, before 2016, seem to have done better than those that bet on a smooth transition and waited. A huge number of high level Obama people must have been counting on that practically-certain-to-happen payday and they missed the boat.
Going back to your old firm probably feels like a defeat for those ambitious people.
Timing is eveything. When Bill destroyed the Democratic Party, he did it at a time when the people who came up with Kennedy were retiring or dying, leaving Bill and Hill as the only game in town.
Even though Obama destroyed Team Blue, the Clintonistas are still around. Obama’s personal celebrity has never been passed onto others. What good is an Obama associate? Obama didn’t usher in a political revolution. The youth voted for Bernie Sanders after all. Loyalty to Obama when Obama hasn’t been the recipient hasn’t been a useful rallying cry in elections thus far. Its likely not to change.
Then of course, Obama enjoyed the support of both anti-war and anti-Clinton types in 2008. Going full Imperialist and Third Way might not matter to his followers, but it won’t transfer their loyalty to an associate of Obama. The raucous rallies of Tim Kaine attended by a handful of people who happened to be in the wrong place at the right time are a sign of this.
Well, I don’t think this is rocket science. I could think of a few remedies, some of them legal.
Does anyone here increasingly detest Obama the more I hear about him in the news?
The man sold America out. People wanted the next Roosevelt in 2008, someone who would address their economic grievances. Instead they might as well have gotten Bill Clinton’s 3rd and 4th term.
Now he’s getting rich and his associates are going back to participate in the looting of the American people.
Actually, no. His movements are what I long expected; they neither add to nor detract from my opinion of him. Obama appears to be gliding towards centimillionaire-dom and may never come back to politics. He’s not a concern of mine unless that changes.
I’m more bent over the ongoing efforts to keep Sandernistas out of power throughout the Democratic Party. In special elections. In state Party hierarchies. The Clinton machine and its satellite affiliates are behind this effort. They concern me.
Can we detest Obama more? Yes we can!
Worth a song.
King Biscuit Boy, 1968, with Crowbar
“Shout (O)bamalama”
…about stealing chickens
Apologies to Otis Redding
Obama simply outsourced the hiring of his appointees to Citigroup via Michael Froman BEFORE Obama was even elected.
https://newrepublic.com/article/137798/important-wikileaks-revelation-isnt-hillary-clinton
“Michael Froman,..at the time was an executive at Citigroup, wrote an email to Podesta on October 6, 2008, with the subject “Lists.” Froman used a Citigroup email address. He attached three documents: a list of women for top administration jobs, a list of non-white candidates, and a sample outline of 31 cabinet-level positions and who would fill them. “The lists will continue to grow,” Froman wrote to Podesta, “but these are the names to date that seem to be coming up as recommended by various sources for senior level jobs.”
“The cabinet list ended up being almost entirely on the money. It correctly identified Eric Holder for the Justice Department, Janet Napolitano for Homeland Security, Robert Gates for Defense, Rahm Emanuel for chief of staff, Peter Orszag for the Office of Management and Budget, Arne Duncan for Education, Eric Shinseki for Veterans Affairs, Kathleen Sebelius for Health and Human Services, Melody Barnes for the Domestic Policy Council, and more. For the Treasury, three possibilities were on the list: Robert Rubin, Larry Summers, and Timothy Geithner.”
Froman resurfaced as the trade negotiator who pushed for the TPP.
The inexperienced Obama might have felt comfortable with this pre-selected list.
For the welfare of the country Obama could have done due diligence on the quality of their work and replaced them as he saw the results, particularly Eric Holder.
But that is assuming Obama cared about the results.
So far, It has worked out well for him in his post presidency.
It was not simply Obama that sold the country out, the Democratic leadership did.
Please! He certainly knew what he would get when he put Froman in charge of this task. Their connection goes back to autumn 1988. We were all HLS ’91 classmates, and IIRC, they were in the same first-year section. And if you took even a single class with our future President– and section mates took the basic 4: contracts, torts, property, and civil procedure– you certainly knew who he was. He was very vocal. Both also served on the Harvard Law Review together.
After HLS, Froman ended up working in the Clinton White House and ultimately became Robert Rubin’s chief of staff at Treasury, then followed Rubin to the Council on Foreign Relations and then Citigroup. IIRC, it was Froman who first introduced him to Rubin.
More to detest:
Obama: a Hollow Man Filled With Ruling Class Ideas
I included that Counterpunch piece in Links for 6/4/17; fyi, there’s some discussion of that piece in that comment thread.
Wow, I’m so surprised! Given the deeply-felt humanitarian bent of Obama’s presidency, I thought for sure he and his associates would work for charities, or campaign against war, or something like that. You know, put on his comfortable shoes and march with us common people!
Seems like the only shoes they know are the white ones.
Give the man some credit, he founded the Obama Foundation! (see obama.org). Most appropriate slogan too, when you google the foundation: “I’m asking you to believe. Not in my ability to create change — but in yours.” So you see, it was a case of simple misunderstanding – Barry didn’t offer us change, per se, but the opportunity to inspire us to be our own change. So we failed him miserably on two counts: we misunderstood his brilliant and inspiring oratory about change, and we then failed to put on our steel-toed boots and kick him in his scrawny a$$ to convince him to be the agent of change anyway.
On a totally related note, his library renderings completely remind me of Oak Woods cemetery’s mausoleum not far away from his library’s proposed site. Fitting, seeing how his library will contain the cremated remains of “hope and change.”
You’re right, we should have done more to spur change. Like camping out on Wall Street, for instance. Or blocking the Dakota Access pipeline. We really let him down :'(
This article is a good reminder that in our plutocratic oligarchy, there are unethical men and women in both major political parties. Their primary concern is not for the public welfare or for the Constitution, but for how well they can please the billionaires and the CEOs of the largest corporations, so that they can gain lucrative rewards.
How did George W. Bush’s appointees fare after leaving the government? A perusal of Wikipedia provides a few examples:
Elaine Chao, Labor Secretary from 2001 to 2009. After that, she was on several boards, such as the Institute of Politics at the Harvard Kennedy School of Government, Wells Fargo, NewYork–Presbyterian Hospital, News Corp, Dole Food Company, and Protective Life Corporation. And now she’s Trump’s Secretary of Transportation.
Robert Gates, Defense Secretary from 2006 to 2011 (2.5 years into the Obama administration!). He’s chancellor of the College of William & Mary, and is on the boards of Starbucks and the Boy Scouts of America.
Christopher Cox, Chairman of the SEC from 2005 to 2009. He is a partner in the law firm Bingham McCutchen LLP, and he is on numerous boards, such as health care companies Alphaeon Corporation and Calhoun Vision, Inc., and photonics manufacturer Newport Corporation. He is a trustee of the University of Southern California.
I could go on, but the point is that the great majority of Bush’s appointees landed on their feet, too. I would venture to guess that many of Trump’s lamentable appointees will also land on their feet after leaving government employment. Scott Pruitt, Betsy DeVos, Jefferson B. Sessions, Steven Mnuchin, Jay Clayton, and Tom Price will all do very well for themselves after they leave the government.
No doubt about it. Although heading up a college and helping to lead the Boy Scouts are noble endeavors, even for someone who didn’t work for W.
I’ve said it before. There were three main causes of rise of the new plutocracy. The silent mutiny in Vietnam 50 years ago that killed conscription. Outsourcing and busting of unions that ended wage inflation. The fall of the Soviet Union that rinsed away the fear of a worker’s revolt. Corporate media and academia are completely silent on the counter coup that reinstalled the aristocracy, once again. For the credential 10%, their jobs are dependent on not recognizing the changeover. The revolving door perpetuates the exploitation of the little people to the benefit of the rich.
Yes, yes, and yes. I would add a little to your list: the civil rights, women’s rights, and environmental movements of the 1960s and 1970s scared the oligarchs. The Powell memorandum of 1971 is a convenient starting place for the response of the oligarchs to the uppity insolence of so many Americans, although there were significant events both before and after the memorandum was written. A good summary is available in chapters 2 and 3 of Dark Money, by Jane Mayer.
I suggested in their comment section that the Intercept investigate the revolving door of the Obama admin when they were writing about the Trump Admin’s corruption. I suggested both investigations could be publicly funded. I’d personally pitch in $30
I for my part, want to know what the queen of fracking, Sally Jewell, got for all her efforts on behalf of big oil/gas. Surely not as much as anyone working to degrade financial regulations, but her efforts were probably more damaging to American health. Separately, Wikipedia editors immediately, within 5 minutes removed a like to Bloomberg articles on Sally’s efforts**. Wikipedia founder may be rejoicing about HTPPS encryption getting around national firewalls / external censorship, but it’s not doing much about the internal censorship that money exerts.
** https://www.bloomberg.com/news/articles/2014-07-03/sally-jewell-obamas-pro-fracking-climate-czar
Thank you for continuing to point out the horrific influence of Sullivan and Cromwell on the world we currently inhabit.The Dulles brothers, S&C partners, were heavily involved in the Paris Peace Conference after World War One. They played a major role in the shaping the post-War world, including the boundary drawing of the Middle East (we now know how well that one turned out!).
Although Allen was dismissed by JFK after the Bay of Pigs fiasco, he was at CIA headquarters strarting on Novemeber 21, 1963. He was responsible for overthrowing democratically elected governments in Iran and Guatemala, among other places.
I chatter on…
As Gore Vidal said, “I am not a conspircy theorist. I am a conspiracy analyst.”
https://www.youtube.com/watch?v=mek6-vY-1xw
In this all new episode of Redacted Tonight VIP, Lee Camp discusses money in politics with Professor Paul Jorgensen, who recently published “50 Shades of Green” with a team at the Roosevelt Institute. This study measured the precise impact of sums of money on specific political issues, using the test cases of the Dodd Frank Bill and Net Neutrality Bills. Lawmakers who received donations from Big Banks and Big Telecom companies later voted in favor of policies that benefitted the companies, despite their initial vote. They discuss the challenges that this study faced, such as dearth of investigations like these in academia, the money laundering schemes of PAC’s, the function of the political parties, hidden sources of money, and the effects of the Citizens United Supreme Court decision. How much does the elite control our government, and can the United States really be called a “representative democracy.” It may sound grim, but Professor Jorgensen concludes with solutions to this seemingly intractable political problem. In the second half, Lee Camp discusses the recent Special Election in Georgia and the suspicious findings in the aftermath of the vote. Finally, Lee covers Trump’s pull out of the Paris Climate Deal, and how the Paris deal was not the deal we should be defending. This and more on Redacted Tonight VIP.