This report was written by Andrew Perez, Walker Bragman and Julia Rock.
When President-elect Joe Biden’s Treasury Secretary nominee Janet Yellen disclosed that she accepted big speaking fees from major corporations and industry groups, many liberal pundits quickly defended her and suggested the revelations are not newsworthy.
However, The Daily Poster has found that many of those same companies and groups have been lobbying the agency Yellen has been selected to run. Antony Blinken, Biden's pick for Secretary of State, has been consulting for giant companies with interests before his new department, as well.
On Friday, Politico reported that Yellen, who served as Federal Reserve chair from 2014 to 2018, had raked in millions from speeches to Wall Street firms and other corporate interests. After spending the past four years criticizing the Trump administration’s corruption, some liberals are now arguing that Yellen’s paid speeches aren’t relevant or worth reporting — even though the payouts are sizable and germane to her prospective job in government.
"Seriously — are you kidding me?" MSNBC host and former Wall Street executive Stephanie Ruhle said about Politico’s story. She added: "Janet Yellen was paid market value.” Former Foreign Policy editor David Rothkopf asked whether Politico would prefer that Yellen had “taken a vow of poverty and spent her non-government work time sitting in a convent scribbling formulas with a quill pen?”
Yellen’s financial disclosure shows she made more than $7 million from speaking fees in just the three years after she left her government job. The bulk of the money, $4 million, came from companies and trade groups that have reported lobbying the Treasury Department in the past two years, according to a Daily Poster review of lobbying records.
Potential Conflicts Of Interest
Retired politicians, former senior government officials, and prominent journalists often collect five and six-figure checks for giving paid speeches to big corporations or trade associations that lobby for them in Washington.
As common as “buckraking” is, however, the practice creates obvious potential for conflicts of interest — after all, powerful people are getting paid anywhere from tens to hundreds of thousands of dollars by special interests for doing very little.
Many of the financial firms, banks and industry groups paying Yellen will have business before her Treasury Department.
While Yellen pledged in an ethics form that she will recuse from matters involving some companies for one year, she only promised to “seek written authorization” in order to participate in matters involving a number of financial firms that regularly lobby the Treasury Department, including Goldman Sachs, Citigroup, and Citadel. Yellen said she would do so for one year from when she last made paid speeches to the companies.
Investment bank Citigroup paid Yellen a combined $1.1 million for six speeches between March 2019 and October 2020. The company lobbied the treasury department this year on COVID relief, “financial reform rules, housing finance reform, cyber security legislation, and anti-money laundering legislation.”
Hedge fund Citadel lobbied the Treasury and Congress on “legislative and regulatory services relating to tax treatment of investment partnerships and financial products, including issues relating to Tax Cuts & Jobs Act,” the GOP’s 2017 tax law. Citadel paid Yellen $810,000 for three speeches.
Goldman Sachs, which paid Yellen $67,500 for a speech in June, reported lobbying Congress and Treasury this year on implementation of Democrats’ 2010 Dodd-Frank Wall Street reform law and “issues related to capital and resolution.”
Dodd-Frank established capital requirements mandating big banks have certain reserves on hand to protect against future collapses and resolution authority for winding down failed financial institutions.
Yellen’s ethics commitments form made no mention of other companies that lobby the Treasury Department, such as the Swiss Bank UBS. Yellen received $112,500 from UBS for a speech in January 2019.
UBS reported lobbying Congress and the Treasury this year on the Base Erosion and Anti-Abuse Tax (BEAT), a tax that was included as part of Trump’s 2017 tax bill.
BEAT was supposed to prevent multinational corporations from shifting their profits from the United States to evade taxes, but UBS and other foreign banks have successfully lobbied the Treasury to enact rules exempting them from the provision.
Consulting For Defense Contractors
While liberal pundits slammed Politico for reporting on Yellen’s speaking fees, they largely ignored the story’s news about two other Biden cabinet nominees.
Blinken, Biden’s secretary of state-designate, disclosed his clients at the secretive consulting firm WestExec Advisors. Biden’s nominee for director of national intelligence, Avril Haines, reported that she was paid $180,000 by controversial data-mining company and U.S. intelligence contractor Palantir.
It’s become increasingly common in Washington for former government officials to work as strategic consultants instead of lobbyists — marketing their high-level government experience and extensive relationships, while avoiding certain activities that would require them to register to lobby and publicly reveal their clients.
WestExec, which Blinken co-founded, seemed to be built around that premise. Haines previously worked as a principal at WestExec, as well.
According to a Daily Poster review, Blinken’ advised seven companies that have recently lobbied the State Department — including aerospace manufacturer Boeing; the Blackstone Group, the world’s largest private equity firm; social media giant Facebook; and pharmaceutical company Gilead.
Boeing is one of the country’s largest defense contractors, relying on the U.S. government for a substantial portion of its revenue. The State Department helps Boeing sell commercial planes overseas, and it also approves foreign arms deals by companies like Boeing.
According to his ethics filing, Blinken plans to sell his stakes in WestExec entities, which are worth as much as $6 million, within 90 days of his confirmation. Blinken made no commitments to recuse from matters involving his former clients or WestExec clients, pledging only to seek prior authorization before participating in matters involving such businesses for a period of one year.
Blinken has also served as a partner at Pine Island Capital Partners, a private equity firm that’s said it’s looking to invest in “defense, government service and aerospace businesses.” The firm’s D.C. partners include a number of former top national security officials, diplomats, and congressional leaders.
In September, the firm set up a new “blank check company” in Delaware called Pine Island Acquisition Corp., and started seeking investments.
Pine Island Acquisition Corp. promised investors that the company will leverage its roster of former defense and government officials to capitalize on “increased demand in the U.S. defense market for advanced electronics, communications, sensor and detection processing and other technologies that enhance the modernization efforts of the Department of Defense’s military readiness.”
Blinken listed Pine Island Acquisition Corp. among his employment assets in his financial disclosure.
Photo credit: @jlhervàs / Flickr
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