President Obama’s nominee for the Treasury Department’s top legal job still can receive almost $3 million in pay over the next three years from one of the nation’s largest financial-services companies under a compensation plan approved by government ethics lawyers.
If confirmed as the department’s next general counsel, George W. Madison would earn a government salary of $153,200 and get an additional $955,000 next year from his previous employer, TIAA-CREF, as a participant in the New York-based company’s “long-term compensation plan,” according to a government ethics filing.
• Click here to view the financial disclosure form for George Madison. (PDF)
Mr. Madison, who will no longer work for the company where he served as general counsel, will get $1.6 million from TIAA-CREF in 2011 and $333,000 in 2012 under the pay arrangement, government records show.
Mr. Madison’s Treasury appointment is pending. According to the Treasury Department, Mr. Madison has agreed not to work on matters that would “affect the ability or willingness” of TIAA-CREF to pay out the $2,918,000 he is slated to receive over the next three years.
Retirement-planning company TIAA-CREF manages more than $300 billion in retirement and other assets for 3.6 million members, mostly working in the medical, research and academic fields. The company has a big presence in Washington, spending more than $1 million to lobby Congress, the White House, the Treasury Department and other agencies over the past year.
Ethics specialists say Mr. Madison’s continuing financial relationship with TIAA-CREF, which has lobbied government officials on numerous issues, including the Troubled Asset Relief Program (TARP), deserves close scrutiny, given the company’s broad interests on issues in which the Treasury Department holds sway.
“He’s counsel to the Treasury, which could confer benefits on the company he previously left; there is an appearance that his judgment could be affected,” said Bennett L. Gershman, a government ethics specialist at Pace University in New York. “The way you have to avoid that is, he has to recuse or disqualify himself from any issues involving TIAA-CREF.”
Treasury officials said government ethics lawyers approved the deal and that safeguards are in place to avoid any conflicts.
“The department’s ethics attorneys, in consultation with the U.S. Office of Government Ethics, have determined that Mr. Madison may retain his interest in the TIAA-CREF deferred-compensation plan,” Treasury spokesman Andrew Williams said.
According to the department, the TIAA-CREF pay is for work that Mr. Madison already completed, and the compensation won’t be based on the value of the company.
“In accordance with ethics laws, Mr. Madison has agreed not to work on a matter that would affect the ability or willingness of TIAA-CREF to pay these contractual benefits to him,” Mr. Williams said.
A TIAA-CREF spokesman said it won’t seek out Mr. Madison on particular issues involving the company.
“While certainly it is up to the Treasury Department to determine their recusal policy, we would not expect to talk to Mr. Madison about specific issues pertaining to TIAA-CREF,” said company spokesman Chad Peterson.
Rules issued by Mr. Obama bar agency officials from working on specific matters “directly and substantially related” to their former employers for two years.
Bruce Buchanan, a professor of government at the University of Texas, said Mr. Madison’s continued compensation from TIAA-CREF should not pose an ethics problem as long he and department ethics lawyers are careful about monitoring potential conflicts.
“You have a small talent pool, and you don’t want to tie the hands of the government,” he said. “You just have to be careful to run things through the legal department and have the relevant officers recuse themselves when it makes sense to.”
Over the past year, the company has lobbied Congress, Treasury, the White House and other agencies over issues involving TARP, executive-compensation rules, mark-to-market accounting, mortgage reform, stimulus spending and securities regulations, among other issues, according to U.S. Senate lobbying disclosures.
“An individual assuming a position in the federal government must understand the responsibility to the public in terms of trust,” said Marthena Cowart, a spokeswoman for the Project on Government Oversight, a nonpartisan watchdog group.
“Unlike the private sector, the public needs to be assured that the official making the decision on their behalf has no conflicts of interest, real or perceived,” she said.
Many of Mr. Obama’s top appointees have reported taking home millions of dollars in deferred-compensation arrangements from their private-industry jobs, though they generally reported taking the money before starting their government positions.
Attorney General Eric H. Holder Jr. reported receiving $3.3 million, including deferred compensation, from his previous job as a partner at the law firm Covington & Burling.
But arrangements like Mr. Madison’s aren’t unprecedented.
Dick Cheney continued getting deferred compensation from defense contractor Halliburton after he left the company to become vice president. In 2003, Sen. Frank R. Lautenberg, New Jersey Democrat, said in a press release that the nonpartisan Congressional Research Service researched the issue at his request and determined that the deferred compensation was a financial interest.