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Elizabeth Warren Challenges Hillary Clinton to Stop the Revolving Door

Chip Somodevilla/Getty Images

At the Netroots Nation convention on Friday, Senator Elizabeth Warren delivered a direct challenge to Hillary Clinton and all Democratic presidential campaigns to support legislation that would end the “revolving door” between top government positions and corporate America.

“Anyone who wants to be president should appoint only people who have already demonstrated they are independent,” Warren said to the progressive convention-goers, “who have already demonstrated that they can hold giant banks accountable, who have already demonstrated that they embrace the kind of ambitious economic policies that we need to rebuild opportunity and a strong middle class in this country.”

This is the first time Warren has decided to engage in the presidential election, which activists tried for months to get her to enter. Instead of asking candidates to endorse one of her particular policies on bank reform or student loans, Warren is focusing on the personnel who will implement those policies. It’s a notable choice that dovetails with Warren’s interest in ensuring that executive branch appointments will not tip the scales in favor of Wall Street or private industry, seen most directly in the fight to block Antonio Weiss from the No. 3 position in the Treasury Department. Warren raised the profile of Weiss, a longtime bank executive, enough for him to withdraw his nomination.

“Sure, laws matter. But it also matters who interprets those laws, who enforces those laws,” Warren said. “Think of it this way: How would the world be different today if, when the economic crisis hit, Joe Stiglitz had been secretary of the Treasury and Simon Johnson and Robert Reich had been key economic advisers?”

Hillary Clinton, the frontrunner for the Democratic nomination, has struggled with a perception from the liberal wing of the party that she has close ties to Wall Street, fueled by big bank donations to the Clinton family foundation and speeches she's made at places like Goldman Sachs. While Warren doesn’t mention Clinton by name, the implication is clearly to force her to embrace ending the revolving door.

Specifically, Warren challenged all presidential candidates to endorse a bill introduced this week by Senator Tammy Baldwin and Representative Elijah Cummings called the Financial Services Conflict of Interest Act, which would change a variety of ethics laws around presidential appointments. The bill would ban the golden parachutes for government service given by financial services firms to executives who leave for jobs in the White House or regulatory agencies. Citigroup, Goldman Sachs, and other firms have handed out these bonuses, which provide incentives for bank executives to get hired for positions regulating the industries they came from. 

The Baldwin-Cummings bill would also increase prohibitions on former executive branch officials from lobbying the government, from one to two years. It expands “lobbying contact” to close loopholes and cover any lobbying activities. Finally, the bill requires executive branch personnel to recuse themselves from any official activities that would directly benefit their former employers, or clients they might have worked for as a lobbyist. “Wall Street insiders have enough influence in Washington already without locking up one powerful job after another in the executive branch of our government,” Warren said.

While the Baldwin-Cummings legislation faces long odds of passage in a Republican Congress, they can serve as a model for an incoming Democratic President. Warren is trying to use those new rules as a benchmark of conduct, and signaling that she would work just as hard to torpedo any nominations that diverged from this standard.

Most recently, Warren has helped to stop the nomination of Keir Gumbs, a lawyer with corporate law firm Covington and Burling, whom the Obama administration sought to install on the five-member panel of the Securities and Exchange Commission. Gumbs ran a seminar for corporate clients on how to dodge taxes, in particular through shifting their headquarters overseas in a corporate “inversion.”

The Obama White House has plucked many of its top regulatory officers from the corporate world, or from the Robert Rubin wing of the Clinton administration. It has been difficult for progressives and financial reformers to build an experienced bench, and often people like Warren have to play defense. But these anti-revolving door principles would provide a forcing mechanism for future presidents to look elsewhere to fill their administrations, such as academia or progressive advocacy organizations.

These issues aren’t always a major focus of progressive activists, and Warren wants to change that. “The only way that candidates for president—or for any office—will slow down the revolving door, the only way candidates will say 'enough is enough' is if you—YOU—demand that they say it.”

Adam Green of the Progressive Change Campaign Committee responded to Warren’s remarks by saying they “offered a framework for how Democratic presidential candidates can promise to reduce Wall Street influence in key appointments.” The PCCC added that they would “ask all Democratic presidential candidates to make specific commitments—and to make down payments on that promise by ensuring progressive economic thinkers are on their campaign policy teams.”

Correction: A previous version of this article stated that the Obama administration revoked Antonio Weiss's nomination for Treasury under secretary. Weiss withdrew from consideration.