Overview
Title
To place post-employment restrictions on certain former employees of insured depository institutions, insured credit unions, and certain agencies, and for other purposes.
ELI5 AI
The Financial Regulators Revolving Door Enforcement Act is a rule that says important people who used to work for certain banks and credit unions can't work for those same businesses right away when they leave. They have to wait two years before they can work for or help those businesses influence their old employers.
Summary AI
The “Financial Regulators Revolving Door Enforcement Act,” H.R. 7121 aims to prevent potential conflicts of interest when former employees of federal financial regulatory bodies, insured banks, and credit unions move to the private sector. It introduces a 2-year restriction on former senior officials from working with or consulting for regulated banks or credit unions. It also prohibits these individuals from influencing regulatory agencies on behalf of private entities. Additional measures include mandatory disclosures, regular compliance reviews, and training sessions to ensure adherence to ethical standards and conflict-of-interest regulations. Penalties are imposed for violations.
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AnalysisAI
General Summary of the Bill
The "Financial Regulators Revolving Door Enforcement Act" seeks to impose restrictions on the post-employment activities of certain former employees of government agencies and financial institutions such as banks and credit unions. The core of the legislation is to prevent potential conflicts of interest and unethical practices associated with the "revolving door" phenomenon, where individuals move between roles in government and the private sector in ways that may undermine regulatory integrity.
Key provisions include a two-year ban on employment or consultancy roles for former financial executives moving to certain covered government agencies and a similar restriction on senior government employees transitioning to private banks or credit unions. It also sets guidelines for disclosing new and past employment relationships to ensure transparency and mandates annual training to curb conflicts of interest and uphold ethical standards among agency employees.
Summary of Significant Issues
One key issue with the bill is the lack of clarity around definitions, particularly the term "covered agency." This ambiguity complicates understanding which organizations are subject to the bill’s restrictions. Additionally, while the bill outlines restrictions and disclosure requirements, it does not clearly define the enforcement mechanisms or penalties for non-compliance, potentially hindering its effectiveness.
The requirement for tracking employment history over a 20-year period may impose significant administrative burdens. Furthermore, the discretionary authority given to the Attorney General regarding penalty amounts lacks specific guidelines, which could lead to inconsistencies in penalty enforcement.
The training requirements, while aiming to enhance understanding and compliance, may lead to unnecessary expenditure without a clear assessment of their necessity or impact.
Impact on the Public and Stakeholders
The bill could have broad implications for former employees in the financial sector and regulatory agencies, impacting how they transition between public service and private sector roles. By imposing a "cooling-off" period, it aims to build public trust in financial regulatory processes by reducing potential conflicts of interest and increasing transparency.
For current employees of covered agencies, the mandatory annual training sessions could equip them with the knowledge needed to navigate ethical challenges effectively, although the required resources might strain agency budgets.
For financial institutions, compliance with the bill's requirements might necessitate changes in hiring practices and internal policies. While potentially positive in promoting ethical standards, these changes could also incur administrative costs and necessitate shifts in recruitment strategies.
Overall, the bill endeavors to enhance the integrity of financial regulation by promoting ethical transitions between public and private roles. However, to maximize its impact, the legislation would benefit from clearer definitions, explicit enforcement protocols, and considerations regarding the administrative burdens it might create.
Issues
The lack of a clear definition for 'covered agency' in various sections, such as Section 2 and Section 4, leads to ambiguity about which agencies are affected, potentially impacting the scope and enforcement of the bill.
The enforcement mechanisms or consequences for non-compliance with the restriction periods and disclosure requirements in sections such as Section 2 and Section 4 are not clearly mentioned, which could lead to challenges in ensuring compliance.
In Section 3, the absence of specified penalties for violations of the restriction on contact with a covered agency makes the section potentially ineffective, as there are no outlined consequences for breaches.
The 20-year retrospective compliance tracking requirement in Section 2 could be burdensome for individuals and agencies, creating complexity and potential administrative challenges.
In Section 7, the discretionary power given to the Attorney General to determine civil penalty amounts could lead to inconsistencies without clear criteria or guidelines to assess the severity of violations.
The use of broad terms like 'financial executive officer' and 'senior agency employee' in definitions under Section 8 could lead to confusion about the applicability and scope of the bill's restrictions.
The requirement for annual training in Section 5 could result in unnecessary expenditure and resource allocation without a strong mention of the evaluation of training necessity or effectiveness.
The duration of the two-year restriction on employment and contact with covered agencies stipulated in Sections 2 and 3 may be viewed as arbitrary without a transparent rationale, potentially leading to disputes about its appropriateness either as too short or too long.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The section specifies the short title of the legislation, which is called the “Financial Regulators Revolving Door Enforcement Act.”
2. Restriction on employment of certain former agency employees and former senior employees of insured depository institutions and credit unions Read Opens in new tab
Summary AI
Congress is proposing a rule that would prevent certain former employees of banks or credit unions from working for or consulting with government agencies for two years if they held a high-level financial position at an institution that was investigated or penalized by those agencies in the past 20 years. Additionally, these former government employees can't work for private banks or credit unions regulated by the same agency within two years of leaving their government job.
3. Restriction on contact with covered agency by former agency employees Read Opens in new tab
Summary AI
An individual who worked as a senior employee at a government agency cannot contact that agency on behalf of someone else for two years after leaving the job. This rule applies to issues like regulations, policies, investigations, distributing federal funds, and enforcement actions.
4. Required disclosures for certain former agency employees and executives of insured depository institutions and insured credit unions Read Opens in new tab
Summary AI
The section mandates that certain former employees of government agencies, within one year of being hired by or consulting for financial institutions they previously regulated, must disclose their new position details to their former agency. Similarly, financial executives moving into senior agency roles must also disclose prior financial institution positions within a year, unless exempt under specified conditions concerning timing and previous roles.
5. Training requirement for employees of covered agencies Read Opens in new tab
Summary AI
Each year, starting one year after this law is passed, all senior employees at specific government agencies must attend a training session. The training covers how to avoid conflicts of interest, understand ethical standards, know legal obligations, and learn about whistleblower protections and incentives.
6. Review of insured depository institution and insured credit union compliance and policies Read Opens in new tab
Summary AI
The section requires the head of each relevant agency to check every insured bank and credit union to ensure they are following the law and to review their policies. This review must happen within one year after the law is enacted and then every two years.
7. Penalties Read Opens in new tab
Summary AI
The section outlines that if the Attorney General finds someone or an insured financial institution has violated the Act, they can be penalized with a fine decided by the Attorney General. When deciding the penalty, the Attorney General will consider how severe the violation is, whether the violator has been penalized before, and if they have been penalized for this violation under another law.
8. Definitions Read Opens in new tab
Summary AI
In this section of the bill, various definitions are provided for key terms used throughout the act. It specifies what is meant by "covered agency," "financial executive officer," "insured credit union," "insured depository institution," and "senior agency employee," outlining which organizations and individuals are included under each designation.