Introduction:
The Regulatory Integrity Act aims to sever the revolving door between government regulatory positions and private industry roles by imposing strict post-employment restrictions, ownership, and compensation guidelines for regulators. This policy is designed to prevent conflicts of interest, enhance public trust in regulatory processes, and ensure that regulatory decisions serve the public interest rather than private gain.
Key Provisions:
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Extended Cooling-Off Period:
- Duration: Increase the cooling-off period from one year to ten years for senior regulators transitioning from regulatory agencies like the SEC, FDIC, OCC, FDA, CDC, NIH, and CFPB to roles in industries they previously regulated.
- Scope: This ban includes direct employment, consultancy, or advisory roles within these industries.
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Stock Ownership Restrictions:
- Immediate Family: Regulators and their immediate family members are prohibited from owning stocks or financial instruments in companies that fall under the jurisdiction of their regulatory agency during their term and for two years post-employment.
- Divestiture Requirement: Current stock holdings must be divested into a blind trust or sold before assuming the regulatory role.
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Compensation Bans:
- Direct Compensation: Any form of direct compensation, including bonuses, from regulated entities is prohibited during the tenure at the regulatory agency and for two years after leaving office.
- Gifts and Travel: Restrictions on receiving gifts, travel, or other benefits that could be perceived as influencing regulatory decisions.
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Leadership and Board Roles:
- Prohibition: Former regulators are barred from taking up executive or board positions in companies they had oversight over for at least two years post their regulatory service.
- Public Notification: Any transition into lower roles within these industries must be publicly disclosed and subject to review for conflict of interest.
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Ethics and Training:
- Mandatory Training: All regulatory staff must undergo annual ethics training focusing on conflicts of interest, confidentiality, and the importance of impartial decision-making.
- Whistleblower Protections: Enhance protections for whistleblowers within regulatory agencies to encourage reporting of violations.
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Enforcement Mechanism:
- Penalties: Violations of these restrictions would incur severe penalties, including fines, bans from future government service, and potential criminal charges in cases of egregious misconduct.
- Oversight Committee: An independent oversight committee will monitor compliance, with the power to audit personal and financial dealings of regulators.
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Public Transparency:
- Disclosure: All financial disclosures must be made public, ensuring transparency in the personal financial dealings of regulators.
- Annual Review: An annual report detailing compliance with this act will be published.
Rationale:
This policy addresses the systemic issue of regulatory capture by creating clear, enforceable boundaries between public service in regulatory roles and private sector employment. By extending restrictions, banning stock ownership, and prohibiting compensation from regulated entities, the policy aims to realign the incentives of regulators with public interest rather than personal or corporate gain.
Conclusion:
The Regulatory Integrity Act seeks to restore confidence in regulatory bodies by ensuring that regulators are free from the influences of future employment prospects or financial benefits from the industries they oversee. This not only protects the integrity of regulatory decisions but also upholds the principle that public service should serve the public good foremost.