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:
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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.
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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 position. 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
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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.
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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:
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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.
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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.
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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.
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