The Washington PostDemocracy Dies in Darkness

Clinton signs on to proposed Wall Street restrictions backed by liberals

Democratic presidential candidate Hillary Rodham Clinton speaks on the campus of Case Western Reserve University in Cleveland on Aug. 27 during a "Commit to Vote" grass-roots organizing meeting. (David Richard/AP)

Hillary Rodham Clinton is endorsing a proposed change to federal law championed by liberal groups that is intended to slow or stop a revolving door between Wall Street and Washington.

“Increasingly, Americans' trust in government is eroding,” Clinton and Sen. Tammy Baldwin (D-Wis.) wrote Monday. “A big reason for that is the so-called revolving door between government and the private sector,” they wrote in a joint op-ed on the Huffington Post Web site.

Baldwin campaigned for Clinton in Iowa on Monday as part of a stepped-up effort to showcase the elected officials and other leading Democrats who are endorsing Clinton. Baldwin is among the most liberal members of Congress to yet do so.

Baldwin proposed the legislation last month, and Democratic presidential candidates Sen. Bernie Sanders (I-VT) and former Maryland Gov. Martin O’Malley quickly endorsed it. Clinton, the Democratic front-runner, had been the subject of a liberal lobbying campaign urging her to do the same.

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. But liberal activists cried foul, saying the exception allowed already well-paid Wall Street executives to get fat bonuses before taking short-term, resume-enhancing jobs in government.

“Inviting outside voices into government is often a good thing,” Clinton and Baldwin wrote, noting that many respected public servants also had a business background. “Most of the time, that private-sector experience is an asset, not a liability. But in some cases, it can affect the public trust -- for example, if a public servant's past and future are tied to the financial industry. That's when people start worrying that the foxes are guarding the hen house.”

Massachusetts Sen. Elizabeth Warren (D), who has led a progressive backlash against what she calls the overreach and concentration of power among big banks, had urged all 2016 presidential candidates to back the legislation. In addition to blocking bonuses that critics said encouraged Wall Street firms to more or less loan out top executives, the bill would extend to two years the time those executives must recuse themselves from government decisions involving their private sector employers.

"Secretary Clinton deserves real praise for listening to Elizabeth Warren-wing Democrats and taking this vitally important first step in slowing down the revolving door between Wall Street and Washington,” said Charles Chamberlain, executive director of Democracy for America, one of the liberal groups that took Clinton to task last week for not having pledged support for the bill.

“We expect to hear additional ways Secretary Clinton will commit to reducing the power of Wall Street insiders in government and on her campaign going forward," Chamberlain said.

Clinton has struggled to win wide support on the far left, and her perceived ties to Wall Street are one reason.

Clinton hired two Wall Street executives to be top aides when she was secretary of state, and both received pay packages from their employers when they left the private sector. It is not clear that either of those aides would have declined the government job offers if this legislation were in place, but both would have forfeited sizable sums to do so.