When former European Commission President Jose Manuel Barroso announced he would be taking a job with U.S. investment bank Goldman Sachs, the outrage and condemnation came hard and fast.
CCTV America’s Ahmad Coo reports.
The revolving door between politics and private sectorFormer European Commission President Jose Manuel Barroso’s decision to take a job with U.S. investment bank Goldman Sachs raised concerns and condemnation. But this is not the first time a high-profile public sector official has shifted into the private sector. CCTV America's Ahmad Coo reports.
Barroso will be the chief lobbyist for Goldman Sachs International in Europe. But his shift into the private sector is a trend that has been around for decades.
It is what they call the revolving door- the movement of high-profile public sector officials into private sector jobs and vice versa. Regulators and lawmakers who policed certain industries become consultants and some members of private industry get appointed by governments to become ministers.
Critics said this cozy relationship between governments and the private sector creates a so called ‘moral hazard’ and presents many instances of conflicts of interest.
Efforts to stop this revolving door have been introduced in recent years, in the U.S. and abroad, especially after the 2008 global financial crisis.
The U.S. signed the Dodd-Frank Act to protect the consumer from bad bank behavior, especially when it comes to risk.
The European Commission also has Article 245 which directly deals with moves similar to Barroso’s jump into the private sector.
As a matter of fact, Barroso isn’t the first to defy this rule, his switch into the private sector is the latest in a very long list of defections on both sides of the Atlantic.
Former British Prime Minister Tony Blair has said repeatedly that he is not a banker or businessman. But he is currently a senior adviser for JP Morgan Chase, the biggest bank in the United States, which allows him to make nearly $3 million a year.
President Barack Obama’s first Treasury Secretary Tim Geithner, one of the main architects in the rebuilding of the U.S. economy from 2009 to 2013, is now president of private equity firm Warburg Pincus.
There is also Ben Bernanke, former chairman of the U.S. Federal Reserve who oversaw the recovery from the Great Depression. He’s now a senior adviser for hedge fund Citadel and is chairman of the advisory board for Pimco, an investment management firm.
Despite all the outrage by certain EU and French officials, and all the measures adopted in the U.S., the revolving door will always be spinning- whether regulators and the general public like it or not.
Joe Minarik discusses the ‘revolving door’ between public and private sector
For more on the ‘influence economy’ and lobbying in U.S., CCTV America’s Rachelle Akuffo spoke to Joe Minarik, senior vice president and research director of Committee for Economic Development.