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My view: The lesser-known 'revolving door'

By Jeffrey Joseph

For the Deseret News

Published: Thursday, Feb. 6 2014 12:00 a.m. MST

The EPA and CFPB arguably have more power to issue regulations that affect our economy than any other regulatory bodies, yet they’re among the worst offenders when it comes to cronyism and favoritism among their ranks.

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When people hear about the proverbial “revolving door” in Washington, they’re likely to envision the ever-blurring lines between congressional and White House offices and high-powered K-Street lobbying firms that rely on the contacts former Hill and administration staffers possess. But that’s just the start of the growing collusion between some of the federal government’s most powerful regulatory agencies and special-interest advocacy groups.

Take the Environmental Protection Agency (EPA) for example. The EPA is responsible for regulations that cost U.S. companies billions of dollars in compliance costs, but so many staffers have been hired from the Natural Resources Defense Council (NRDC), an environmental activist group with clear anti-business policy goals, that one former employee called the tight-knit group of former NRDC staff filling offices on the Hill and in the EPA the “NRDC Mafia.”

It’s no surprise then that in recent years official EPA statements have mirrored environmental activists’ talking points. As newly uncovered emails reveal, in at least one instance, the agency crafted its messaging to conform specifically with the Sierra Club’s agenda. EPA officials have frequently provided activists with advance copies of EPA statements and press releases and granted environmentalist groups preferential treatment when it came to waiving fees for Freedom of Information Act requests.

The EPA’s revolving door has become such an institution that even staffers forced to resign from their government positions land on their feet atop America’s most influential environmental organizations. Take Al Armedariz, the EPA’s Region 6 administrator, who had to resign after admitting on camera that the agency’s goal was to “crucify” those that disagree with the anti-fossil fuel agenda — he smoothly transitioned to running the Sierra Club’s “Beyond Coal” initiative.

Though only in its infancy, the newly created Consumer Financial Protection Bureau (CFPB) is already proving to be a similar revolving door.

Most of the bureau’s employees come from partisan backgrounds where cycling freely through activism and government is the norm.

Members of President Obama’s election campaigns, top donors to his and Sen. Elizabeth Warren’s campaigns, and state Democratic Party officials fill the ranks of the CFPB staff. The bureau’s scholarly employees, meanwhile, bring careers worth of study in regulatory economics, yet no experience in the private sector, where their regulations will be applied.

Most notably, however, is the dominance of ideological think tanks at the CFPB. Spread throughout the bureau are alumni from the Center for American Progress (which was founded by John Podesta, a former chief of staff to Bill Clinton and current adviser to President Obama), the Center for Responsible Lending, and Americans for Community Organization Reform Now, better known as ACORN — progressive organizations that were heavily involved in crafting the CFPB’s structure and powers.

Top CFPB employees don’t tend to stick around very long. A shocking number have already left the bureau to accept cushy consultant and lobbying positions.

Along with key staffers like the former chief of staff and senior adviser for mortgage servicing, former deputy director Raj Date left the bureau to start Fenway Summer, a “consumer finance advisory” firm that just so happens to specialize in the regulations of the CFPB — the same ones he was instrumental in creating. Ironically, the CFPB was created in part as a reaction to the national frustration with similarly cozy relationships between the private sector and financial regulators.

The EPA and CFPB arguably have more power to issue regulations that affect our economy than any other regulatory bodies, yet they’re among the worst offenders when it comes to cronyism and favoritism among their ranks. It’s time Americans are clear that partisan activists and impartial regulation don’t mix.

Jeffrey H. Joseph is a business professor at the George Washington University School of Business.

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