Skip to content
January 25, 2024

Rep. Schiff Introduces Bill to Regulate “Revolving Door” in Financial Services Industry

Washington, D.C.— Today, Representatives Adam Schiff (D-Calif.) and Maxwell Frost (D-Fla.) introduced a bill to significantly enhance the integrity of financial regulation in the United States. The Financial Regulators Revolving Door Enforcement Act proposes to expand, standardize, and fortify post-employment restrictions for individuals transitioning between public sector roles and positions within financial services corporations.

The "revolving door", the cyclical movement of personnel between regulatory or legislative positions and roles within the industries they formerly supervised, risks eroding public confidence and diminishing the effectiveness of regulatory agencies.

"When financial regulators go through the revolving door and go to work for the industry or corporations they once regulated, it's the average American consumer who stands to lose," said Rep. Schiff. "That’s why I am introducing this bill to ensure that the people entrusted with protecting and regulating our economy are working for us, not just biding their time before they jump ship to lucrative industry jobs. This legislation will help make certain that our financial system is fair and transparent, giving everyone a fair shot, not just the financial insiders."

Specifically, the Financial Regulators Revolving Door Enforcement Act would:

  • Extend existing federal 12-month post-employment restrictions, or “cooling off periods”, to 2-year waiting periods for senior banking employees and high-ranking financial services regulators moving between roles, including agencies such as Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB).
  • Strengthen restrictions on contact with previous employers or clients by former agency employees and bans on taking official actions that directly and substantially benefit their former employer or clients.
  • Enhance transparency by requiring post-employment disclosures for previous agency employees accepting senior positions for a financial service corporation they previously regulated.
  • Establish mandatory ethics training for employees at financial sector regulatory agencies that emphasize avoiding conflicts of interest, adhering to the highest ethical standards, and maintaining protections for whistleblowers who report potential violations.
  • Align penalties for these violations with existing law governing post-employment restrictions on former officers and government employees.

To read the full bill text, click HERE.