Executive Council Statement | Corporate Greed

Working People Demand a Ban on Government Service Golden Parachutes for Wall Street Executives

Government regulators should serve the public interest, not the moneyed interests of Wall Street. But in recent years, it has become common for Wall Street banks to provide lucrative financial incentives for their senior executives to enter into government service. This controversial practice promotes a revolving door between government agencies and Wall Street that undermines the effective regulation of our financial system.

At many Wall Street banks, CEOs and other senior executives are entitled to the accelerated vesting of their equity awards if they voluntarily resign to enter government service. In other words, they are eligible to receive a government service golden parachute. This stock-based compensation otherwise would be forfeited on resignation for failing to meet the required employment or performance requirements.

The fidelity of government regulators to the interests of the public is of paramount importance in the regulation of banks and the capital markets. As we saw all too often leading up to the Wall Street financial crisis, big banks are able to manipulate the rules designed to ensure economic stability. We need dedicated civil servants to police Wall Street, not former bank executives who land with golden parachutes.

Bribing government officials after they take office is illegal, and so should payments made to induce Wall Street executives to enter into government service. This apparent conflict of interest undermines the public’s faith in the integrity of our financial regulatory system. For these reasons, working people demand an end to the payment of government service golden parachutes to Wall Street executives. 

The AFL-CIO has called on the biggest Wall Street banks to ban government service golden parachutes by filing shareholder resolutions that will go to a vote at annual shareholder meetings this year. At best, paying government service golden parachutes is a waste of corporate assets. And at worst, they subvert the very government agencies that regulate Wall Street.

The AFL-CIO strongly supports passage of the Financial Services Conflict of Interest Act that will prohibit government service golden parachutes. Working people applaud U.S. Sen. Tammy Baldwin (D-Wis.) and U.S. Rep. Elijah Cummings (D-Md.) for introducing this legislation, and we welcome the endorsement of this needed reform by both Democratic presidential candidates Hillary Clinton and Bernie Sanders.

The Wall Street financial crisis dramatically illustrated the dangers of weak government regulation. Never again can we allow the revolving door between Wall Street and government to undermine the regulatory agencies that provide for the safety and soundness of our banking system and capital markets. The time has come to ban Wall Street’s government service golden parachutes once and for all.