On New Year’s Eve, the US Office of Government and Ethics posted the financial disclosure forms submitted by the incoming Biden administration from secretary of state nominee Antony Blinken, director of national intelligence pick Avril Haines, and Yellen. They cover the past two years of their activities. Yellen’s form — rightly or wrongly — raised some eyebrows: It revealed that the former Federal Reserve chair made more than $7 million in speaking fees over that time. The list of those looking for a Yellen appearance includes Wall Street names such as Citi and Citadel and corporations such as Google and Salesforce.
Blinken’s and Haines’s disclosures sparked questions as well. Through a consulting firm he co-founded, WestExec Advisors, Blinken advised firms such as Blackstone, Facebook, and Boeing. Haines provided consulting to Palantir and also served as a principal and consultant at WestExec.
The revelations renewed a debate about the so-called revolving door in politics and what public officials should be allowed to do once they’re in the private sector — especially if there’s a chance they’ll take a position in the public sphere again. The incoming Biden administration will likely need to keep having this conversation, especially as progressives push for appointees without business ties. The lines around acceptable ties of public servants to the private sector are blurry, and there’s a lot of disagreement on what’s disqualifying and what’s not.
Yellen bore the brunt of the scrutiny this time, likely due to the $7 million figure. Some progressives decried Yellen’s speaking fees as corruption in plain sight. Others came to her defense, noting that her record as Fed chair wasn’t Wall Street-friendly, that she’s being transparent about the fees, and that these types of media stories are often ones that are meant to stir up controversy. Some people also noted that there might be airs of sexism in criticism of Yellen, though transparency, regardless of gender, is important.
“Look at these from a perspective of results,” said Carter Dougherty, communications director of Americans for Financial Reform, pointing to Yellen’s work at the Fed, where she generally favored better banking regulation and took the central bank’s full employment mandate seriously. “Do I wish Wall Street money was not everywhere? Yes. But she’s got a track record that’s praiseworthy and shows signs of being a great Treasury Secretary.”
Along with her disclosure, Yellen sent a letter outlining the steps she will take on ethics compliance, including getting permission from the Treasury Department’s ethics lawyer to weigh in on issues involving firms from which she’s received money for a year. Blinken and Haines took similar steps.
It’s a tricky situation. Yellen is one of the preeminent economic minds in the country, and it’s understandable for people to want to hear her speak — and for her to want to be paid for it. Not to mention that economics and Wall Street could use more female voices.
Assuming Yellen wasn’t sharing insider knowledge or advising banks on how to game government systems, giving a relatively benign talk isn’t all that different from, say, signing a high-dollar book deal. But she doesn’t seem keen on releasing the speeches, which the Biden team say were largely question-and-answer sessions (some public) where she had no prepared remarks. And regardless, that public officials can make this much money to talk feels, well, icky.
“There’s a lot of work we need to do on the revolving door and dealing with what we talk about as the reality and the appearance of any favoritism based on prior relationships,” said Beth Rotman, director of money in politics and ethics at the watchdog group Common Cause.
People are willing to pay a lot to hear Janet Yellen talk
Yellen served as Fed chair from 2014 to 2018 and was the first woman to hold that role. She did not leave the job willingly — President Donald Trump declined to reappoint her, despite his predecessors doing so, and appointed current Fed Chair Jerome Powell instead.
After her exit, she became a fellow at the think tank the Brookings Institution, a board member at the Center for a Responsible Federal Budget, and, generally, kept at it. She testified before Congress, spoke at conferences and universities, gave interviews to the press. She also gave speeches to companies, for which she was paid.
According to her financial disclosure, Yellen made about $1 million from Citi and hundreds of thousands of dollars from hedge fund Citadel for speaking fees, on top of collecting speaker checks from Goldman Sachs, Bank of America, Barclays, Credit Suisse, BPN Paribas, Google, and others. In total, the $7 million she made in two years was a big haul.
“Obviously, when we look at the issues of money and politics in democracy, when there are large numbers, there could be potential conflicts,” Rotman said.
But Yellen’s speaking fees, for better or worse, aren’t anomalous. Her predecessors at the Fed, Alan Greenspan and Ben Bernanke, did the same kind of speaking arrangements once their public tenures ended. Bernanke is now on Citadel’s payroll as a senior adviser. Moreover, Yellen did not expect to be coming back into public office after leaving the Fed — she was a bit of a last-minute surprise as a treasury nominee. And speaking at a bank a handful of times is not the same as working at the bank.
What matters is not entirely that Yellen gave the speeches but also transparency about what she said in them, said Jeff Hauser, the founder and director of the Revolving Door Project. “It is, by DC standards, not a huge deal if she makes the speeches public. The more we’ve been thinking about it, we need to see those speeches,” he said.
The Biden transition said that while no comprehensive video or transcripts are available, Yellen’s views on a variety of topics — including monetary policy, the climate crisis, and economic inequality — have been well documented.
“Leaders in academia, business and economics were eager to hear Yellen’s views especially during a turbulent time for the economy,” said Biden spokesperson Sean Savett in an email. “Yellen did not deliver prepared remarks at her speaking engagements — most were armchair conversations where she answered questions from a moderator, some of whom were reporters. A number of those events were public and many were covered by the press at the time.”
For example, Bloomberg covered a 2019 interview with Yellen hosted by the National Retail Federation for which she was paid more than $150,000.
Part of the backlash to Yellen’s fees, beyond the sheer amount of money she made, may also be a reaction to a culture where big businesses spend a lot to get fancy people to talk to them so they, in turn, can look fancier. “There is this high-end economy built around making people feel important and having a dog-and-pony show featuring superstar-economist-turned-first-woman-Fed-chair and having her perform for you. It makes your clients feel like you’re important,” Hauser said. “It’s gross, but it’s not a huge deal.”
“I’m not terribly surprised ... people who have some sort of government position revolving around the economy would be highly sought after to speak to this group of folks,” said Maurice BP-Weeks, co-executive director of the Action Center on Race and the Economy (ACRE). “Would I prefer her or other folks not take speaking fees from Wall Street? Of course. But honestly, that’s just not where my primary focus would start. It would not start with Janet Yellen.”
The Biden administration is going to run into some thorny issues on ethics
Ethics in politics is a complicated issue, and there are dubious practices and figures on both sides of the aisle. The incoming Biden administration has already run into complaints from progressives that it’s not doing enough on the revolving door, and it’s going to run into more.
Even before the election, progressives and moderates were sniping about “purity tests” and arguing whether calls from the left for Biden to bar any former Wall Street executives or corporate lobbyists would freeze out potential picks of color. And as Biden has gone about announcing various Cabinet picks, advisers, and appointees, the back-and-forth continues.
Biden has tapped Brian Deese to lead the National Economic Council. He is a former Obama adviser who helped steer the auto industry bailout during the financial crisis. After the Obama administration, he went to work at BlackRock, a giant asset manager, where he was the global head of sustainable investing. The decision irked many progressives, who worried about BlackRock’s record on climate and energy investments (the firm says it’s focusing more on sustainability and the environment). Moreover, the idea of someone going from public office to finance and back to public office to many people just feels worrisome.
“That is the kind of thing that actually worries me, treating all economic expertise as only originating from Wall Street banks or people who have worked on Wall Street,” BP-Weeks said.
As mentioned, the headlines about Yellen in recent days also overshadowed the disclosures from Blinken and Haines. The pair were giving strategic consulting and advice to firms, which firms presumably wanted because of their service in public office. Blinken was dipping his toes into private equity. Hauser said those things are much more worrisome than Yellen’s speeches.
“It’s just kind of obvious that they are making money by privatizing their public service,” he said. “Our view on Yellen is that it raises a lot of questions that should be answered, but our guess is she has the answers available.”
A Biden transition official said that the “overwhelming majority” of Blinken’s work was giving “risk assessments, relying on his decades of knowledge about foreign policy and global politics,” and that he is severing ties with his clients. The official also noted that when Blinken joined Biden’s campaign, he took unpaid leave from WestExec and notified all of his clients. The official said that Haines’s work with Palantir was primarily focused on diversity and inclusion. Haines’s main source of income over the past two years has been from Columbia Law School.
This kind of debate isn’t going away
Corruption, money in politics, and the revolving lobbyist door are major issues in America, and what should and shouldn’t be accepted continues to be debated. Perhaps in an ideal world, public officials and lawmakers would spend their entire careers in public service or plucked out of academia and never have any relationships with the private sector. But that’s not likely on the horizon, nor is that necessarily ideal.
“All of us are always having to grapple with the balance of special interests and expertise, and there wouldn’t be many appointees who couldn’t show from their past experience some relationships with some of the same industries that they’ve been called upon to work with, because that’s where their experience comes from,” Rotman said. “We have to strike the balance between appointing people with appropriate backgrounds but also ensuring there’s not a revolving door that gives unfair influence to people based on prior relationships.”
There are remedies to be put in place: requiring divestitures and blind trusts, officials recusing themselves from certain matters. And reasonable minds can agree with what counts as enough, or if in some circumstances, there’s no sufficient remedy to prevent conflicts.
Rep. Alexandria Ocasio-Cortez (D-NY) found herself in the middle of the Yellen debate. The New York progressive’s finances, whether too much or too little, have often been the subject of scrutiny, and she responded to a tweet drawing parallels between the two and how women are evaluated on their money. In a series of tweets, Ocasio-Cortez said regardless of gender or party, it’s important for the public to know what the financial situation and income streams of public servants are. “We can note how scrutiny gets disproportionately wielded on women,” she wrote, but Wall Street ties are “very reasonable to examine.”
The point of these disclosures is transparency and to shine a light on information for the public to be able to judge public officials and weigh their decisions accordingly. The debate about what is and isn’t acceptable is part of the process of proving to Americans that the deck isn’t stacked — or revealing that it is. Yellen’s speeches are not the first such dustup, nor will they be the last.
“It just shows that we’ve got a ways to go where public officials see this as a toxic thing to do, and that’s just an ongoing campaign,” BP-Weeks said. “Learning about it doesn’t really change how we would push Treasury or push the administration.”