The Honorable Peter Rodino effective. 1/ This would constitute a sudden and major loss of expert and experienced staff. Recruiting for and promotion to the positions vacated would become more difficult. While the impact on the Commission of such legislation would be great, the benefits would be small. The Commission already monitors the post-employment activities of all its former employees. Moreover, virtually all of the Commission employees to whom the new prohibition would extend are lawyers, subject to the rules concerning professional responsibility of the various state bars. Such regulations, and the present post-employment restrictions in the Ethics in Government Act, are an appropriate response to the limited potential for abuse posed by the postemployment activities of mid-level personnel. For these reasons, enactment of S. 237 would, over the long term, have several adverse consequences: First, as noted above, it is likely to cause the preeffective date departure of a significant number of mid-level Commission employees and to impede their replacement. Second, future employment candidates are more likely to accept competing offers in the private sector over employment at the Commission, given the combination of the Commission's lower salaries relative to the private practice of securities law, accounting, and finance, and the increased restrictions on their future employability. Third, Commission employees will be more likely to leave the agency earlier in their careers to avoid becoming subject to the post-employment restrictions. Fourth, those individuals who elect to stay at the agency after the restrictions take effect will be more likely to remain here for their entire careers because the restrictions diminish their outside opportunities; while the Commission depends on a core of career professionals, I am concerned that, were it to 1/ In testimony before this Subcommittee in 1979, The Honorable Peter Rodino become an "all career" agency, its effectiveness as a regulator of the rapidly changing securities markets would be undermined because the Commission would lose the perspective provided by noncareer professionals with private experience. Fifth, a lack of turnover in mid-level positions would reduce subordinates' opportunities for advancement, exacerbating the problem of retaining qualified junior personnel not themselves subject to the post-employment bar. Alternatives to Section 207 (c) - even those I recognize, of course, that restrictions on the postemployment activities of senior government officials are necessary. Nonetheless, the desirability and scope of such restrictions must be balanced against the negative effects on the ability of federal agencies to attract competent professionals. Set forth below are three alternatives to proposed Section 207 (c) which would, in my view, address the legitimae goals of the legislation without unduly impeding recruitment of qualified personnel. While Under current law, the Office of Government Ethics makes agency-by-agency and position-by-position determinations concerning the application of the existing one-year bar. Congress may wish to consider tightening the standards used in making these determinations, I believe that it is unnecessary to replace the flexibility inherent in position-by-position review. Informed, independent decisions in this field should not be sacrificed in favor of a scheme which depends mechanistically on employee salary. Accordingly, I recommend that the bill be amended to retain the ability of the Office of Government Ethics to determine which positions require the one-year bar. This would permit sensitive and careful determinations that the potential for overreaching by persons in certain positions actually outweigh the deleterious impact on the employing agency. As an alternative, Congress may wish to consider a provision previously proposed by the Commission in 1979. At that time, the Commission's principal criticism of the one-year bar in the Ethics in Government Act of 1978 was that 18 U.S.C. 207 (c) prohibits, not only those contacts with an agency which might rightfully give rise to a suggestion of improper influence, but also bars contact even where the potential for questionable The Honorable Peter Rodino influence was limited or non-existent. The Commission also criticized the Act for its failure to distinguish between private appearances involving nonpublic communications where the public might plausibly suspect improper influence -- and public contacts with the agency, where this risk is highly attenuated. 2/ Accordingly, the Commission proposed the following amendment: Subsection (c) of this section shall not apply to any This provision would provide for public accountability of the agency contacts of former agency employees and a check against abusive communications without unfairly depriving former employees of the right to pursue their careers. C. Combined approach Finally, as I mentioned at the outset, it is possible to meld both these suggestions to provide a bar applicable to those persons designated by the Office of Government Ethics as occupying positions uniquely subject to influencing former colleagues and a disclosure requirement for others. Such a scheme would permit Congress to extend the reach of Section 207 (c) to the GS-16/1 level without deterring recruitment in all covered positions, regardless of the actual duties and responsibilities performed. * The Commission's ability to maintain its reputation as a forceful and informed administrator of the federal securities laws depends on its ability to continue to attract the talented and highly motivated staff which has been an agency hallmark over the past 54 years. I am deeply concerned that S. 237 would impair that ability. Because of the great importance I attach to this matter, I would be pleased to meet with you or your staff to discuss this legislation and the alternatives I have proposed. 2/ This agency administers the federal securities disclosure, in addition to facilitating knowledgeable investment decisions, also acts as a The Honorable Peter Rodino where the influence was limited or non-existent. The Commission also criticized the Act for its failure to distinguish between private appearances involving nonpublic communications public might plausibly suspect improper influence contacts with the agency, where this risk is highly attenuated. 2/ Accordingly, the Commission proposed the following amendment: Subsection (c) of this section shall not apply to any This provision would provide for public accountability of the agency contacts of former agency employees and a check against abusive communications without unfairly depriving former employees of the right to pursue their careers. c. Combined approach - Finally, as I mentioned at the outset, it is possible to meld both these suggestions to provide a bar applicable to those persons designated by the Office of Government Ethics as occupying positions uniquely subject to influencing former colleagues and a disclosure requirement for others. Such a scheme would permit Congress to extend the reach of Section 207 (c) to the GS-16/1 level without deterring recruitment in all covered positions, regardless of the actual duties and responsibilities performed. The Commission's ability to maintain its reputation as a forceful and informed administrator of the federal securities laws depends on its ability to continue to attract the talented 2/ This agency administers the federal securities knowledgeable investment decisions, also acts as a The Honorable Peter Rodino and highly motivated staff which has been an agency hallmark over the past 54 years. I am deeply concerned that S. 237 would impair that ability. Because of the great importance I attach to this matter, I would be pleased to meet with you or your staff to discuss this legislation and the alternatives I have proposed. |