Markets

By Any Other Name, Goldman's Spin of the Revolving Door Would Still Stink

By Alain Sherter

Updated on: August 19, 2011 / 1:41 PM EDT / MoneyWatch

Here's a "revolving door" story with a twist.

Peter Haller used to be a vice president at Goldman Sachs (GS). Before that, he worked for the SEC and the Federal Energy Regulatory Commission. He left Goldman, where his duties apparently included working his old contacts at the securities agency on matters of interest to the bank, in 2006 to join a Washington lobbying firm. This year, he got a new job working for Rep. Darrell Issa. As a mid-level aide to the California Republican, Haller worked to pressure financial regulators to dilute proposed rules governing the use of derivatives -- rules that were of considerable interest to big securities firms like Goldman.

With me so far? Haller's career arc: government regulator --> banker --> lobbyist --> congressional staffer. Now for the twist. After leaving Goldman, the former financial exec also changed his surname, which previously had been "Simonyi," to "Haller," his mother's maiden name. ThinkProgress, a liberal blog, this week suggested the name change had made it easier for Haller to skirt ethics concerns and glide from Wall Street to a gig on Capitol Hill trying to punch holes in government regulations.

What's in a name?
Haller says he never hid the the name change, which was fully disclosed on his previous employer's Web site. He says he changed his name to honor his mother's wishes, whose father was killed by Nazis in Hungary during World War II and who wanted to carry on the family name (Haller's sister also changed her name).

ThinkProgress doesn't dispute that explanation. Rather, it objects to the conflict of interest involved in Haller's moving from Goldman to a job with a lawmaker, who as head of the House Oversight and Government Reform committee has devoted himself to blunting financial regulation. ThinkProgress says:

So while [Haller] worked for Chairman Issa on issues directly assisting a top Goldman Sachs lobbying goal -- namely, to weaken new Dodd-Frank regulations -- the public was unaware that he previously worked in the compliance division of Goldman.

No argument there. But I doubt the name change had much to do with it. The public, while more cynical than ever about government, is generally unaware of just how deeply incestuous the ties are between the feds and private industry. After leaving office, it is today routine for lawmakers who had fought for tougher corporate oversight to join lobbyists focused on softening it, like former Republican senator Michael Oxley of Sarbanes-Oxley fame.

The membrane separating Wall Street from Washington is particularly thin. Hundreds of lobbyists working for six big banks and their trade associations are former federal government employees. Of these, most work in Congress, mostly as aides to lawmakers, while others are in the White House, U.S. Treasury or other government agencies.

As his chief of staff, President Obama earlier this year hired none other than Bill Daley, formerly JPMorgan Chase's (JPM) top fixer in Washington. At the highest level, people like ex-Treasury Secretary Robert Rubin, formerly of Goldman Sachs (GS) and Citigroup (C), pass effortlessly between the public and private sectors. Conflicts of interest are not only ignored -- they're institutionalized.

Riding the merry-go-round
A recent case in point is the SEC's latest embarrassment, in which it was caught destroying its own investigative records. Working at the agency is a golden ticket to a lucrative career on Wall Street, while many SEC officials come from the financial industry. Could it be that one reason securities regulators were effectively burning potential evidence of financial fraud is that it might benefit their previous -- and future -- employers? To dismiss the possibility would be naive.

This isn't limited to the financial industry, it's worth noting. Comb the resumes of government agency and congressional staff and you will find hundreds (thousands?) who were drawn from across Corporate America. Sometimes that makes sense, since governance can benefit from little bit of "real-world" expertise. Too often, though, it reflects a cynical conjoining of corporate, political and government interests.

In America today, it is indisputable that the corridors of power often run smack through the corner office. The revolving door, in fact, is no longer an apt metaphor. There is no door -- only a welcome sign. By this measure, Peter Haller is small potatoes. But the problem he represents, whatever name you give it, is much larger.

Image by Dan4th Nicholas via Wikimedia Commons
Related: