Reform of financial regulations is unlikely because the legislative process has been compromised at its most basic level. The problem: too many staffers in key places on Capitol Hill aspire to work for banks.
“I’ve heard that some staffers on the Senate banking committee are already entertaining job offers from the banks,” a senior Senate staff member to us. He declined to speculate about individual staffers.
It wouldn’t be the first time that the Senate Banking Committee found itself run by high level staffers who had already taken job offers from banks.
The most famous example is L. Courtney Ward, who headed the Senate Banking Committee’s minority staff in the mid-nineties. Ward, who had worked as a legislative aide for then-Congressman Charles Schumer before rising to Senator Chris Dodd’s staff on the banking Committee, was the chief driver of “tort reform” legislation that was heavily lobbied for by the securities industry. Toward the end of the legislative process for that bill, Ward took a job at JP Morgan while still working on the committee. It is rumoured that JP Morgan actually pushed back his start date until the bill passed. He is now a managing director at Citigroup.
The allure of banking is hardly a mystery. The money is better. Far better than the government wages paid to Capitol Hill staffers. After years of toiling in government service, many staffers dream of a better life in one of the leafy neighborhoods that are so posh you cannot get their on DC’s Metro. Ward lives in a $2 million house in Wesley Heights, one of DC’s wealthiest areas.
“Everyone talks about people going from Goldman to government. But the problem is the other way. Too many staffers go from Capitol Hill to banking. And even more aspire to make that move. It corrupts the process,” the staffer told us.
Lawmakers hardly want to stop this revolving door. It probably allows them to hire more talented staffers than they otherwise could, given the lower pay scale. What’s more, wealthy former staffers are a good source of campaign cash. In 2004 alone, Ward gave $13,000 to Chris Dodd.
According to the staffer, the allure of Wall Street is even now hurting the chances for real legislative reform.
“In some ways, we’d probably be better off if the staff of the banking committee were all former bankers who made their fortunes and didn’t want to go back. It’s these wanna be bankers that are really dangerous,” the staffer said.
Ward, who hasn’t worked for the Banking Committee staff for nearly 15 years, couldn’t be reached for comment.