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Financial Sector Regulation and the Revolving Door in US Commercial Banks

Part of the Studies in Political Economy book series (POEC)


The “revolving door” is a practice quite widely in use in the United States, in which heads of state agencies, after completing their bureaucratic terms, are entering the very sector they have regulated. This phenomenon is also frequent in France, where it is coined “pantouflage”, and in Japan, coined “amakudari” (descent from heaven). Research conducted and data collected by the research group Corporate Europe Observatory strongly suggest that this process is also significant within EU institutions.


  • Commercial Bank
  • Banking Sector
  • Private Firm
  • Public Procurement
  • Political Connection

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  1. 1.


  2. 2.

    See also on the revolving door inside the US financial sector. See also Transparency International-UK (2011) and Transparency International (2010), which lay down the negative as well as positive effects of the Revolving door.

  3. 3.

    We should underline that this is the first attempt to develop an index related to the revolving door, since we did not find another attempt in the literature to develop such an index.

  4. 4.

    Whose study has received strong criticism from Kane (2014).

  5. 5.

    In related empirical studies, Johnson and Mitton (2003) show that Malaysian firms personally tied to the executive have preferred access to subsidies. Adhikari et al. (2006) find similar evidences in Indonesia.

  6. 6.

    See also Brezis (2013).

  7. 7.

    See also Kaufmann, D. “Rethinking the Fight Against Corruption”, Brookings Opinion, 29/11/2012.

  8. 8.

    Jason Groves, “Disgraced Hoon gets top job at defence firm Westland—which landed £1.7 bn contract when he was Defence Secretary” in Dailymail the 18th may 2011,

  9. 9.

    “Mediator: l’enquête sur les conflits d’intérêts s’accélère” Le Point, February, 18, 2013, See also “Conflit d’intérêts: Aquilino Morelle visé par une enquête préliminaire” in Les Echos, April 22, 2014,

  10. 10.

    These costs consists of time spent in bureaucratic capital formation, and when unlawful behaviors are undertaken, these costs may encompass ethical costs, the social stigma, the probability of being caught and sanctioned.

  11. 11.

    We are aware that for some bureaucrats, who are either more social, or with less “ethical values”, it is easier to either create connection with other people, or create redundant regulations. For purpose of simplicity, we assume that bureaucrats have the same “production” function of bureaucratic capital, and that these social factors are not linked to ability, since removing this assumption does not affect the results. Moreover, the “effort” which describes either social or ethical costs, are in monetary terms.

  12. 12.

    This model which emphasizes the relative amount of bureaucratic capital is therefore related to the concentration index we present in the next section.

  13. 13.

    This Herfindahl is a rescaled and normalized version of the Herfindahl, and is, used by the UNCTAD to compute its export concentration index (UNCTAD 2013, p. 212):

  14. 14.

    We will see in section IV.3. that another declination of the RDI may consist in focusing on public agencies as unit of analysis.

  15. 15.

    The oldest revolving door movement we documented involves Sidney J. Weinberg, a.k.a “Mr. Wall Street”, who was former executive of Goldman Sachs from 1927 to 1969, and who was simultaneously counselor at the White House from 1933 to 1969. See

  16. 16.

    Local or State regulatory agencies—such as the NY housing regulatory agency—as well as foreign agencies—such as the European Central Bank—are therefore excluded from the analysis. However, the examination of the data showed that many firms hire revolvers that at some point of their career joined the Advisory Board of a local Federal Reserve Bank, especially the Federal Reserve Bank of New York, position that can be hold simultaneously with a job in the private sector. Given the many scandals that arose from the leakage Federal Reserve System’s secret documents from the NY Fed towards financial firms, we considered individuals holding position in both private firms and local Federal Reserve Banks as revolvers. For similar concerns, we also consider as revolvers the many individuals that have integrated the 2008 Obama Transition Team while keeping their job in the private sector. See Appendix.

  17. 17.

    Intelligence agencies play a key role in enforcing financial regulation and prosecuting cases of financial malpractices before the courts. The strong interest of financial firms in recruiting members of intelligence agencies can be illustrated by the recent hiring of Patrick Carroll, former FBI agent who headed securities fraud and white collar crime and who locked up Bernard Madoff, by Goldman Sachs. See

  18. 18.

    We also considered the US Trade Representative as a finance-related agency because of its key role for banks’ implementation in foreign markets, notably through trade agreement negotiations.

  19. 19.

    See for instance Samantha Lachamn, “Hillary Clinton Backs Bill That Would Ban ‘Golden Parachutes’ For Wall Street Bankers”, The Huff, Aug 31, 2015.

  20. 20.

    The oldest revolving door movement we documented involves Sidney J. Weinberg, a.k.a “Mr. Wall Street”, who was former executive of Goldman Sachs from 1927 to 1969, and who was counselor at the White House from 1933 to 1969. He notably advised Presidents Roosevelt, Eisenhower, Johnson. See

  21. 21.

    Two-sided revolving door movements are excluded from the distributions.

  22. 22.

    In terms of revolvers (and not movements), it is slightly lower, see Table 2.

  23. 23.

    see for instance Ansolabehere et al. (2003).


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Correspondence to Elise S. Brezis .

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Appendix: Methodological Notes

Appendix: Methodological Notes

The top five commercial banks are selected according to the Fortune 500 rankings of commercial banks (with regard to their total revenue). Other famous financial firms strongly involved in the revolving door—such as Fannie Mae, or Freddie Mac—are diversified financial firms and are therefore not included in the sample.

The main raw data sources are on the one hand, the website, managed by the Center for Responsive Politics, and on the other hand, and provides open-access and documented information on the revolving door process and lobbying in the US political system.Footnote 23 Primary raw data on the revolving door in the top five US commercial banks is therefore drawn from these two websites. Information on revolving door career path is then cross-checked, further documented, corrected when necessary, by complementary information drawn from Linkedin, Wikipedia,,,,, Businessweek, Business Insider, journal articles and other web sources. When this additional source cannot confirm entry–exit dates in the public and private sectors, dates provided by open secret are taken. If multiple converging additional sources diverge with Opensecrets entry–exit dates, the former are taken into account.

Once data is retrieved and cross-checked, a second round of data collection is undertaken, by searching on google potential additional revolved regulators using the following association of keywords: “name of the company + revolving door”, “name of the company + political appointment”, “name of the company + lobbyist”.

1.1 Data Treatment

Revolvers are sorted by the influence and power of their government positions. For those individuals with complex careers and had been in a government position multiple times, the positions that were taken in account are the most influential positions during revolvers’ careers.

Influential positions considered are the following:

  • Chairman of the Federal Reserve, and New York’s Fed.

  • Chief of Staff to the White House.

  • White House: Assistant to the President, congressional liaison.

  • Chief of Staff/Assistant Secretary of Treasury.

  • Congressmen.

  • Deputy/Director of the National Economic Council.

  • Chairman and directors of the Securities and Exchange Commission (SEC).

  • Managing Executive of SEC’s Division of Enforcement.

  • Chief of Staff/Chairman of Commodities Futures Trading Commission.

  • Deputy Secretary/Secretary/Assistant Secretary/Under Secretary of US State Department.

  • Secretary of Navy.

  • Secretary of Treasury.

  • Ambassador.

  • Head/Deputy of the Office of the United States Trade Representative.

  • Chief of Staff to President’s Council of Economic Advisors.

  • Director of Office of Management and Budget.

  • Director of Congressional Budget Office.

  • National Security Advisor.

  • Attorney General (Deputy).

  • Consul to the President.

  • State Governors.

  • Chief of Staff to Chairman of the US Consumer Product Safety Commission.

  • Director, chief of staff of the Federal Housing Finance Agency.

  • Director, chief of staff of the Federal Deposit Insurance Corporation.

  • Member of the Congress’ Finance Committee.

All other positions in federal agencies, boards or commissions are less influential. Positions in local agencies, commissions or boards are not considered, except for members of advisory boards of local agencies of the Federal Reserve System and chief of staff of State governors, who are recorded as less influential revolvers.

The specific case of the Obama-Biden 2008 transition period: This period allowed many banks’ employees integrating Obama transition team without imposing them to leave their position in the private financial sector. We nevertheless consider the membership to this team as less influential position in public office.

Former employees of WaMu, Chase Manhattan Bank, Dime Bancorp and Bank One are considered as part of JP Morgan stock of revolvers. Former employees of Primerica and Travelers group are considered as part of Citigroup stock of revolvers. Former employees of Merrill Lynch and Security Pacific Bank are considered as part of Bank of America stock of revolvers. Former employees of West One Bank are considered as US Bancorp’s stock of revolvers.

1.2 The Coding of Revolving Door Back-and-Forth Movements

Movements from a given public agency to a private to another public agency are counted twice separately: for each revolved regulator achieving this movement is associated one dummy variable equal to 1 when he has moved from the first public agency to the private financial company, one dummy variable when has moved from the financial company to the other public agency. Therefore, an individual following this revolving door path is counted twice for a given company.

However, back-and-forth movements from a private firm to a public agency to the same private firm, or from a public agency to a private firm to the same public agency, are expected to yield additional value to the firm. They are therefore counted threefold: one dummy for the public to the private sector movement, on dummy for the private to public sector movement, and an additional dummy variable indicating this symmetric back-and-forth movement. Therefore, an individual following this revolving door path is counted threefold for a given company.

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Brezis, E.S., Cariolle, J. (2017). Financial Sector Regulation and the Revolving Door in US Commercial Banks. In: Schofield, N., Caballero, G. (eds) State, Institutions and Democracy. Studies in Political Economy. Springer, Cham.

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