By Victor Reklaitis, MarketWatch
Following in the footsteps of other influential ex-lawmakers, former House Financial Services Committee Chairman Jeb Hensarling this month scored a job in the financial industry — with UBS, in the Texas Republican’s case.
It’s hardly a novel maneuver. Other politicians who once chaired that committee or its Senate equivalent have made similar moves as they left office.
Former Massachusetts Democratic Rep. Barney Frank took a seat on Signature Bank ’s /zigman2/quotes/204403715/composite SBNY +2.47% board of directors after running that House panel from 2007 to 2011, while former Ohio GOP Rep. Mike Oxley became a lobbyist for Finra, a securities-industry group, after chairing the committee from 2001 to 2007. Among Senate Banking Committee chairmen, former Texas GOP Sen. Phil Gramm, once Hensarling’s boss, also took a job with UBS /zigman2/quotes/206172872/composite UBS +1.87% /zigman2/quotes/206994749/delayed CH:UBSG +1.56% , and former Connecticut Democratic Sen. Chris Dodd is now with K Street firm Arnold & Porter Kaye Scholer, whose clients include financial companies, after earlier working as a lobbyist for Hollywood.
“Going into the private sector — where one will be compensated primarily for one’s contacts in government — that is all too familiar,” said Jeff Hauser, founder and director of the Revolving Door Project, which aims to track corporate political influence. His project is part of the Center for Economic and Policy Research, a left-leaning think tank.
At the same time, Hensarling’s decision to join a particular company, rather than some other enterprise, could be part of a relatively new and growing trend, according to Hauser.
“It is a little more unusual to go in-house for a specific corporation, rather than go to a law firm or a lobbying shop or a trade association,” he told MarketWatch. “You might actually see this sort of maneuver more frequently in the future, because the relative opacity about what’s going on at a financial institution as big as UBS is such that you can not only avoid registering as a lobbyist, but even if you’re doing lobbyist-like activities, it’s going to be pretty hard for anyone on the outside to know.”
Hensarling’s new job has similarities with when Republican politician John Kasich worked for Lehman Brothers in Ohio from 2001 to 2008 after his nearly two decades in Congress and before he became Ohio’s governor, Hauser said. Hensarling also might end up eventually trying to become his home state’s governor, the Revolving Door Project director added.
Working at a place like UBS means “your reputation doesn’t take the exact same hit as if you were just at a lobbying shop or a law firm that is a quasi-lobbying shop in D.C.,” Hauser said. “He can say, ‘I’m based in Texas, and I’m just businessperson.’”
UBS said in a statement that Hensarling “will work closely with our leadership team, financial advisers and bankers to build and strengthen our most important client relationships across our businesses,” adding that he “will be a great addition to our shared efforts to deliver insights and ideas that differentiate UBS in the eyes of our clients,” given his “long career in both politics and business.” His title is executive vice chairman for the bank’s Americas business.
“I’m looking forward to starting a new career in banking and am grateful for the opportunity to join UBS Americas,” the former Texas congressman said in the statement. “It is exciting for me to be able to join the world’s leading wealth management firm and to work with some of the most talented people in the financial services industry.”
Following a well-worn path
One concern about the former congressman’s new gig is it could mean he will “provide very current intelligence to the top people at UBS about what regulatory changes or enforcement priorities are likely in both the executive branch as well as legislatively,” Hauser said. “He just has an understanding of the federal financial regulatory system that is elite, and so UBS is going to be able to figure out how to benefit from that.” Hensarling also could provide insight into the Consumer Financial Protection Bureau’s workings, as several of his former staffers now work at that agency.
Supporters of Hensarling and UBS could argue that it’s good for the bank to have more information and a better understanding of the regulatory process, Hauser conceded. In addition, they could maintain that it would be “draconian” to try to limit a former public servant’s employment options.
It’s clear that Hensarling is following a well-worn path. MarketWatch looked at where the former heads of the House Financial Services Committee, the Senate Banking Committee or the Treasury Department — 22 individuals in all — ended up working after leaving those roles. In the past 30 years, most of them went on to do financial-sector work. Examples of that include former Treasury secretaries Tim Geithner joining Warburg Pincus and Paul O’Neill joining Blackstone Group /zigman2/quotes/203156858/composite BX +2.17% .
In many cases, their moves into the financial sector have been disclosed in press releases from their new employers. But in some instances, it can be hard to track where these former officials have ended up working, Hauser said. He said reform-minded activists are interested in ramping up what public servants have to disclose about their income after their service is over.
Reform bills fail to get traction
Some lawmakers have introduced bills that aim to ban former senators and representatives from lobbying their old colleagues. Sponsors of such legislation — which hasn’t gotten much traction — have ranged from Massachusetts Democratic Sen. Elizabeth Warren, the presidential candidate, to Republicans Rick Scott of Florida and Mike Braun of Indiana.
Hauser said this type of legislation isn’t likely to become law unless a political candidate makes it a key part of his or her platform, and then wins office with a real mandate to make it a reality. “It would require a sustained political strategy to make an anti-corruption agenda a big part of the news cycle for probably months on end,” he said.
This report was first published on April 15, 2019.