Today, there is a constantly spinning revolving door among both senior and mid-level
regulators and the prosecutors responsible for reining in Wall Street. Senior officials at
the Department of Justice, Securities and Exchange Commission, Treasury and other
key departments have been deeply entrenched in the industries they are supposed to
regulate, and often return to them after they leave government., This practice undermines
their independence and public trust in the federal government’s role of independent
arbiter.

Governor O’Malley will:

Ensure Key Political Appointees Are Independent of Wall Street

Over the last seven years, both the SEC and DOJ have fallen down on the job of
enforcement—sending a message to Wall Street that they are “too big to jail.” The most
impactful step we can take toward stronger enforcement against Wall Street is appointing
people to key positions who will take financial regulation seriously.

Governor O’Malley will:

• Appoint to Key Positions—Attorney General, Assistant Attorney General for the
Criminal Division, SEC Chair—Individuals Committed to Pursuing Criminal
Cases. The DOJ and SEC have been over-reliant on financial settlements for
institutions that break the law. Settlements, even those in the billions of dollars, are
not appropriate deterrents for institutions with trillions of dollars of assets. O’Malley
will require that appointees to key positions have strong backgrounds in fighting for
the public interest and a proven ability to prosecute people who break the law.

• Require the SEC Director of the Division of Enforcement to be a Presidential
Appointee, Subject to Senate Confirmation. Currently, the SEC’s Director of
Enforcement is appointed by and entirely at the discretion of the SEC Chair. In
recent years, this has led to the indefensible practice of appointing both Wall Street
in-house lawyers and their outside lawyers to this critical position9. O’Malley will
elevate this position to presidential appointee, forcing this critical appointment to face
greater scrutiny and transparency, along with a public vote from the U.S. Senate.

Close the Regulator/Prosecutor Revolving Door

• Institute a Three-Year Revolving Door Ban: O’Malley will bar anyone serving in a
financial policy or regulatory role from working for any person or entity appearing
before their former agency/department—or any agency/department they had contact
with when serving the public—for three years. This triples and aggressively
strengthens the existing bar, which currently applies only to “senior” officials.

• Institute an Additional Three-Year Mandatory Disclosure Rule: In addition to the
above ban, O’Malley also will require these individuals to disclose any direct or
indirect contact with agencies/departments they had contact with for an additional
three years.

***Agencies Affected by These Rules: This policy should include people working at the
Commodity Futures Trading Commission (CFTC), Securities Exchange Commission
(SEC), Department of Justice (DOJ) staff that work on economic crimes, Treasury
Department, Federal Deposit Insurance Corporation, Federal Reserve Board, and Office
of the Comptroller of the Currency.


Apply the Same Scrutiny to Key Personnel at the Federal Reserve

The Federal Reserve has played a significant role in slowing down the implementation of
important financial regulations, including delaying for two years a core part of the
Volcker Rule. Appointing people to key positions at the Fed who take financial crimes
seriously, and requiring them to play a more active role in regulatory decision-making,
will further strengthen enforcement on Wall Street.

Governor O’Malley will:

• Require the General Counsel at the Fed to be a Presidential Appointee. The
General Counsel wields outsized influence on the Board, advising the board on every
major decision. In fact, the current General Counsel is sometimes referred to as the
“eighth Fed governor”. Currently, the Fed’s General Counsel is appointed by the
Board of Governors. By increasing transparency around this appointment, O’Malley
will elevate its importance and ensure that only appointees who can prove
independence and a will to work on behalf of the American people—and not the
megabanks—will be appointed to it.

• Require the President of the New York Fed to be a Presidential Appointee. The
President of the New York Fed is the second most powerful member of the Fed. They
serve as a permanent member and vice president of the Federal Open Market
Committee, which establishes the Fed’s monetary policy, and oversee the largest
reserve bank in terms of asset and volume of activity. Currently, the president is
appointed by the regional bank’s board of directors.

• Require the Board of Governors to Vote on All Major Decisions, Including
Those Regarding Financial Reform. The Fed has entered into multi-billion dollar
settlements with financial institutions without its presidentially-appointed and Senate confirmed
Board of Governors voting to accept them. Decisions not to hold
institutions accountable when they break the law should not be left to staff. O’Malley
will support requiring the Board to vote on all major enforcement and supervisory
decisions made by the Fed.