Professor Elam

Nov 20 2014

For decades, Washington DC has had a revolving door relationship with power players such as banks, law firms, and defense contractors.

Jack Lew was working for Citibank. HIs contract actually contained a bonus guarantee if he left the bank for a high level government job.

We are studying compensation contracts including options in accounting. Here a firm is giving somone a bonus for leaving employment. You will recall that most bonuses are for staying with the firm.

So why would a bank give na employee a bonus for leaving to take a government job?  Is it logical to assume that the bank would expect more access than the next bank via its former employee now in  a government position? AFL CIO President Trumka wants to know.

Of course Lew now has the job, so this is about two years late in coming.

THe Huff Post says enough is enough with regard to Antonio Weiss, an international banker nominated to consumer affairs.

What do you think of the revolving door policy, one day you are a 'citizen' the next day you regulate the guys you ate lunch with last week. This is the same sort of cozy arrangement Arthur Andersen had with Enron, even becoming Enron's internal auditor and external auditor at the same time.

For example, Alexander Haig went from the Army to United Technologies a defense contractor, to Secy of State.   Do you suppose United Technologies benefitted from those relationships?