The Treasury Department just announced that George W. Madison has been confirmed as the Department's new General Counsel. But as POGO guest blogger Michael Collins wrote back in June, Madison's recent employment at a firm that's participating in a key bailout program—along with his ethics agreement restricting his ability to work on issues involving his former employer—raises serious concerns about how effective he will be at his new job. His confirmation could also further undermine the public's confidence in the Obama administration's commitment to creating a more ethical government.
As recently as last fall, Madison was the Executive Vice President and General Counsel at TIAA-CREF, a retirement planning firm that manages more than $300 billion in assets (he's still listed on the company's website). As reported by the Washington Times, Madison's ethics agreement with Treasury will allow him to receive almost $3 million in deferred compensation from his former employer over the next few years. As part of this agreement, Madison pledged not to work on "any particular matter that has a direct and predictable effect on the ability or willingness" of TIAA-CREF to pay him his deferred compensation. In addition, he agreed to not participate "in any particular matter involving specific parties in which TIAA-CREF is a party or represents a party" for one year following his retirement in October 2008. He will also have to sign the administration's ethics pledge restricting his participation on issues related to his former employer for two years after his appointment.
The problem is that TIAA-CREF has received government financing under the Term Asset-Backed Securities Loan Facility (TALF), a joint Treasury-Fed initiative designed to increase the credit available to consumers and small businesses. If Madison is prohibited from advising Treasury on issues related to TALF, that would certainly appear to inhibit his effectiveness as the Department’s General Counsel (according to Treasury’s press release, Madison "will serve as senior legal and policy adviser to the Secretary and other senior Department officials," and he's already answered questions about TALF for the Senate Finance Committee). But if he is allowed to work on TALF issues, at the very least there's an appearance of a conflict of interest stemming from his recent employment at a firm that received a TALF loan.
Although Madison assured the Senate Finance Committee at his confirmation hearing that "public service is in the blood of [his] family" and that "ethics is the currency for which [his] practice and career has been run over the last 30 years," we remain concerned that he will also be influenced by the "currency" he continues to receive from his former employer, and the "currency" that his former employer has received from the federal government.