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Newsletter | Revolving Door Project Newsletter | January 12, 2022

Pelosi Turns a Political Slam Dunk to a Troubling Liability

Ethics in GovernmentFinancial RegulationRevolving Door

Good politics demands ethics be a bigger priority for Dems across government

This edition of the Revolving Door Project newsletter was originally published on our Substack. View and subscribe here.

With Omicron surging, Build Back Better sputtering, and the latest voting rights push facing long odds, it’s no secret that Democrats are in desperate need of a win to prove their worth. So what did Democratic leadership do when one such opportunity – enthusiastically championing a move to ban members of Congress from trading stocks – fortuitously fell into its lap? You guessed it…Speaker Nancy Pelosi mocked and immediately rejected it. 

This is political malpractice of the highest degree. Americans across the political spectrum are sick of rampant corruption and they want a solution. Rather than taking simple steps to meet that demand, leadership sneered at it. 

This is, needless to say, a far cry from the course of action that we at Revolving Door Project have advocated when it comes to ethics. As we’ve repeatedly emphasized, raising the ethical bar, particularly in the wake of Trump’s fantastically corrupt reign, is not only the right thing to do but a political no-brainer. Common sense steps to close the revolving door, ban individual stock holding and trading, and increase transparency all would go a long way to demonstrating to the American people that Democrats serve them, not their own pocketbooks. At the same time, it would make past transgressions from Trump and his allies all the more salient to voters. The potential downsides, meanwhile, are negligible. Senior officials exiting government, for example, might only go on to make six figures rather than seven. Members of Congress might see their fortunes grow at a slower rate. Boohoo.  

Importantly, we’ve also warned that, in the absence of Democratic action, Republicans would step in to fill the void and attempt to reap the political rewards. Yes, their interest in corruption is obviously selective, disingenuous, and outright hypocritical. No, it does not stop them from making these arguments, as my colleague Vishal Shankar showed in numerous blogs last year. Nor is there any reason to think that this hypocrisy makes their critiques any less politically potent. 

Sure enough, Republican lawmakers have already seized on Democratic leadership’s opposition to a ban on stock trading. As Nancy Pelosi fails to walk back her comments and her rumored successor Hakeem Jeffries refuses to support a ban, House Minority leader Kevin McCarthy is suggesting that Republicans would advance one should they win the majority. Never mind that they definitely won’t, nor that rank and file Democrats had been pushing a ban long before Pelosi’s recent comments, the Speaker’s stubborn defense of lawmakers’ right to participate in the “free market” has indisputably turned a potential win into a major liability.

Sadly, members of Democratic leadership are not the only ones who have been insufficiently attentive to our advice. While the Biden administration has undoubtedly improved on predecessors’ examples when it comes to ethics, it is a long way from having decisively shut out corporate influence and earned back public trust. Across the administration, the public is still often left to wonder whether key policy decisions are designed to advance the public interest or to benefit officials’ past and future employers. 

Where blatant violations of public trust have occurred, this administration has not always taken them seriously. Despite astounding ethical violations and accompanying evidence of egregious deficiencies in the Federal Reserve’s ethics program under Chair Jerome Powell’s leadership, for example, President Biden chose to nominate Powell to a second term in November. This sends a clear message that ensuring ethical behavior at one of the nation’s most powerful institutions is, at best, a secondary concern.

It’s worth noting that that decision is not only hard to defend on principle but on the politics as well. Having re-elevated Powell, Biden will now own any additional scandals that are uncovered at the Federal Reserve at a moment when the institution seems set to embark on a path of painful rate hikes. Already, more information is emerging about the extent of the ethics violations that occurred during the period of the Federal Reserve’s pandemic intervention. There’s little reason to think that there won’t be more

Demonstrating a commitment to ethical leadership and maintaining trust in the Federal Reserve demands, at a minimum, getting the full story of the Fed’s ethics failures and real commitments for action before Powell is confirmed. This week, we asked Senators to commit to asking the necessary questions of Powell during his confirmation process but the Biden administration should be pursuing answers just as actively as well. 


From a coffee mug to reality, anti-monopoly champions Wu, Khan, and Kanter are leading competition policy for this administration. As my colleague Max Moran wrote for The American Prospect last week, however, the battle over competition personnel has still not been won. Jonathan Kanter, who was confirmed to lead the DOJ’s Antitrust division in November, so far only has two Deputies in place. (In total, there would normally be twelve Deputies and Senior Advisers). And there appears to be a campaign afoot to fill at least some of the other ten roles with revolvers fresh off defending monopolists. One of the figures reportedly under consideration, Sonia Pfaffenroth, “defended pharmaceutical firms, fossil fuel companies, and mining companies from class actions, price-fixing cases, and of course antitrust lawsuits” while in private practice. In her previous stint in the Antitrust division, she blessed mergers between Virgin America and Alaska Airlines as well as the consolidation of Anheuser-Busch InBev and SABMiller into a behemoth that controlled, at the time, “30 percent of the world’s beer market volume and 60 percent of the world’s beer market profits.” 

This should serve as a good reminder that, even as the number of new nominations dwindle, the fight over personnel is ongoing and the stakes are still exceptionally high. 


We often emphasize that the federal government’s lack of capacity threatens every progressive policy goal. Our latest work on this topic, underscores the breadth of the threat. 

Last week, my colleague Hannah Story Brown took a deep dive on the Federal Maritime Commission (FMC), a tiny agency with just 117 employees that is tasked with “regulating the global marine economy, which contributes $397 billion to the US GDP annually and accounts for 80 percent of goods shipped worldwide.” To put that in perspective, “the budget for the military’s marching bands is fifteen times greater than the Federal Maritime Commission’s budget; the Marines alone have five times more musicians than the Commission has staff.” With supply chains in a snarl, lawmakers and the Biden administration have looked to the FMC to play a more active role. As Hannah explains, however, new responsibilities should be accompanied by large increases to the agency’s budget and staff to enable swift and effective action on the scale necessary. 

We continue to emphasize how limited capacity threatens climate action as well. Yesterday, my colleague Fatou Ndiaye published a new piece warning of the risk that capacity shortfalls at the Securities and Exchange Commission could pose to the agency’s ambitious agenda to track and manage climate-related financial risk. That report is the second installment of our ongoing series on climate capacity at the Financial Stability Oversight Council’s member agencies. 

Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:

Merrick Garland Is Undermining the Biden Antitrust Strategy

New Report Warns That Insufficient Capacity at The SEC Might Limit its Role In the Fight Against Climate Change

Climate Finance Capacity Project: Securities and Exchange Commission

Questions And Answers About The FDIC 

The Public Still Needs Answers About The Fed 

Letter Calls on Senators to Grill Powell on Fed Ethics Failures

‘Pandemic Profiteering, Plain and Simple’: Walmart and Kroger Hike Prices for Covid Tests 

Fed’s Richard Clarida Sold Then Bought Stock Fund Before 2020 Bank Pledge

The REAL reason Nancy Pelosi wants to keep trading individual stocks

Nancy Pelosi makes $30 million from tech stocks, scoffs at push to ban congressional trades

Ethics in GovernmentFinancial RegulationRevolving Door

More articles by Eleanor Eagan

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