In another sign that Hillary Rodham Clinton has not won over important voices on the progressive left, several liberal organizations are challenging the Democratic front-runner to support a bill intended to limit the revolving door between Washington and Wall Street.
A letter to be sent to Clinton on Wednesday prods Clinton to join challengers Sen. Bernie Sanders (I-Vt.) and former Maryland governor Martin O’Malley in supporting proposed legislation that would block the payment of large payouts to Wall Street executives who leave high-paying jobs to take government positions.
Anger over high salaries and allegedly high-handed business practices on Wall Street has helped propel Sanders from long-shot liberal protest candidate to a serious challenger against Clinton in key early states. She remains the favorite to win the nomination next year, but has struggled from the start to gain the trust and backing of the Democratic Party's left edge. Her perceived coziness with Wall Street is one big reason.
“It’s hard to imagine Democrats’ 2016 nominee will be truly tough on Wall Street banks that break the law, if they won’t commit to banning their advisers from receiving legalized bribes from those same banks,” said Charles Chamberlain, executive director of the liberal advocacy group Democracy for America.
“Allowing Wall Street bankers who’ve recently received ‘golden parachutes’ into your administration is a little like serving a fox a chicken sandwich before sticking them on hen house guard duty,” Chamberlain said. “It would be funny if it weren’t so obviously boneheaded.”
Massachusetts Sen. Elizabeth Warren (D), who has led a progressive backlash against what she calls the overreach and concentration of power among big banks, has urged all 2016 presidential candidates to back the legislation proposed last month by Wisconsin Sen. Tammy Baldwin (D).
The bill would close what its supporters call a loophole, in which financial services executives can take accelerated payouts of restricted stock options and other forms of lump-sum payment if they leave those jobs to enter public service.
Congress had specifically allowed the payout practice as a way to encourage qualified executives to consider taking senior government jobs.
Although the practice of moving from business to government and back again is fairly common, senior executives would forfeit lucrative deferred compensation and similar perks to do so. So be it, say the liberal groups, who argue that those executives have no business moving into and then back out of jobs with regulatory or other control over their industries.
The letter also signed by groups including MoveOn.org Political Action and Rootstrikers asks Clinton to address the issue and notes that she hired two top Wall Street executives to become senior aides when she was secretary of state. Both received compensation packages before entering government service.
“Awarding outsized bonuses and gifts of equity to Wall Street executives who temporarily 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,” the letter charges. “If the latter, it at best creates the appearance of corruption and conflict of interest. At worst, it results in undue and inappropriate corporate influence at the highest levels of government – in essence, a barely legal, backdoor form of bribery.”
A spokeswoman for the Clinton campaign did not immediately respond to a request for comment on the proposed legislation.