President Obama’s nominee for a senior post at the Treasury Department could receive a variety of financial benefits from his current Wall Street employer if he’s confirmed for the position, according to newly posted ethics records.
The nominee’s financial disclosure shows how a Wall Street firm can reward an executive who moves into a powerful government position where he can help shape regulatory policy and affect the fortunes of the financial industry.
Antonio Weiss is currently the Global Head of Investment Banking at Lazard, which describes itself as the “world’s leading independent financial advisory and asset management firm.” Last week, President Obama nominated Weiss to serve as Treasury’s Under Secretary for Domestic Finance.
In certain circumstances, when the government hires Wall Street veterans, it allows them to receive accelerated financial rewards from their long-term pay plans that would normally mature (or “vest”) over time. Weiss is eligible for several of these rewards, according to documents posted online this week by the Office of Government Ethics. According to Weiss’s financial disclosure form, his retirement agreement with Lazard provides for the “acceleration of vesting of restricted stock units, restricted stock, deferred compensation, and restricted LAM interests.” Those assets include:
- Restricted stock valued between $1 million and $5 million that Weiss would normally receive only if he remained at Lazard through 2017
- Restricted stock units valued between $5 million and $25 million that Weiss would normally receive only if he stayed with the company through 2017
- Interests in Lazard investment portfolios that would normally become available on the following schedule: $1,946,497 in March 2015 and $1,147,220 in March 2016
“Lazard will accelerate all of my unvested Restricted Stock, Restricted Stock Units and Restricted LAM Interests upon my resignation and before I assume the duties of Under Secretary or I will forfeit these interests,” according to a letter from Weiss to a Treasury ethics official. In addition to these financial rewards, Weiss has recently received more than $15 million in compensation from Lazard, as reported by Bloomberg.
Weiss, Lazard, and Treasury did not respond to POGO’s request for comment.
Lazard is hardly the only company that offers financial incentives to employees who become government officials. Last year, POGO reported that Goldman Sachs, JPMorgan, Citigroup, and other Wall Street giants “make it financially advantageous for executives to take government jobs.” Treasury Secretary Jack Lew came under scrutiny, for instance, for a special reward he received from Citigroup when he joined the federal government.
In comments to POGO last year, David Yermack, a professor at New York University’s Stern School of Business, explained the logic behind these accelerated payments. “The basic issue is that a company does not want to continue paying you while you go to work for a competitor, but they are ruling out the idea that working for the government would be a form of competition,” he wrote in an email to POGO. “It never hurts to have contacts in the government, and there are people (like Jack Lew) who may need to work in the private sector from time to time when the party in control changes in Washington,” he added. “It would be a lot harder to attract them if they couldn’t be paid.”
But there’s another side to these provisions. “Through their compensation policies, companies may be fueling the revolving door and making it easier for their alumni to gain influence over public policy,” POGO wrote last year.
In letters sent this week to Lazard and other Wall Street giants, the AFL-CIO asked for a detailed explanation of these “revolving door” clauses. “Unless the position of these companies is that this is just a backdoor way to pay off a newly minted government official to act in Wall Street's private interests rather than the public interest, it is very difficult to see how these policies promote long-term shareholder value,” said Heather Slavkin Corzo, Director of the AFL-CIO’s Office of Investment.
Members of Congress from both sides of the aisle have raised concerns about Weiss’s nomination. “In recent years, President Obama has repeatedly turned to nominees with close Wall Street ties for high-level economic positions,” Senator Elizabeth Warren (D-MA) wrote in the Huffington Post this week. “The over-representation of Wall Street banks in senior government positions sends a bad message. It tells people that one—and only one—point of view will dominate economic policymaking. It tells people that whatever goes wrong in this economy, the Wall Street banks will be protected first. That’s yet another advantage that Wall Street just doesn’t need.”