Fed Makes It Tougher for Former Officials to Work On Wall StreetBy
Regulator increases number of examiners under one-year ban
Policy also limits former officials from dealings with Fed
The Federal Reserve is slamming a wedge into the revolving door between government and Wall Street, by placing several restrictions on former officials who go to work for financial services firms.
An existing rule was revised to expand the number of Fed employees who are subject to a one-year ban on working for a company they’ve been overseeing, the agency said in a statement Friday. New measures will also prohibit examiners from representing any financial firm before the regulator for one year as well as restrict current Fed employees from talking about official matters with people who’ve left the agency within the last 12 months.
The actions come on the heels of a $36.3 million settlement with Goldman Sachs Group Inc. over allegations that a former employee at the bank obtained confidential documents from an ex-colleague he used to work with at the Fed.
The Fed had been under fire by lawmakers in recent years for perceptions that some employees had cozy relationships with the firms they regulated. It came to a head over the case of former New York Fed official Carmen Segarra, who sparked 2014 congressional hearings after she accused her ex-employer of firing her for refusing to change negative findings about Goldman Sachs.
Last year, the Fed announced tougher standards for examiners, including creating a formal process for expressing dissenting views on oversight, such as whether lenders are complying with banking rules and appropriately responding to regulators’ requests. Earlier this week, however, the Fed’s inspector general issued a report on bank supervision that highlighted continuing discomfort some agency employees have with sharing dissent with managers.
The agency’s rule that increases the number of senior examiners from 100 to 250 who have to wait a year before working for firms they examine will be effective Jan. 2. The other shifts will be implemented on Dec. 5. The changes come on the eve of a transition that will see an influx of Trump administration candidates on the Fed board.