Ethics, Politics, and Optics in New Washington

The farce that unfolded in the House of Representatives this week over the independent Office of Congressional Ethics is an important reminder for compliance professionals—of just how weak the Republican grasp on power actually is, and how much (or how little) Washington might accomplish in the coming year.

What happened, essentially, was this. First, Republicans lawmakers eager to wield power dumped ethics and transparency as soon as they could, because most Republican lawmakers don’t want the public to know how beholden to special interests they are, or how venal many of these supposed moralists can be.

Second, Democrats and activists on social media split the Republican Party against itself, to the point where even President-elect Donald Trump said gutting the OCE was not the nation’s most pressing problem right now. Within 24 hours, the daffy idea that started with Rep. Bob Goodlatte, chairman of the House Judiciary Committee, died the ignoble death it deserved.

That’s how Democrats can succeed in thwarting Republicans: not by drawing a line between themselves and Republicans, but by sowing discord within the Republican Party. Above all, they will try to divide Trump and Congress.

Will Democrats succeed every time? No. But given how scrambled Trump’s policy views are, and how small the Republican majority in Congress is, they’ll stand a fair chance plenty of times.

Already Democrats are running this play with sanctions against Russia for meddling in the U.S. elections. To a lesser extent they are running it to stymie Trump’s nomination of Rex Tillerson for secretary of state. Later this year, I’m sure we’ll see this strategy in debates over healthcare reform, rewriting the tax code, Dodd-Frank reform, and infrastructure spending. Democrats only need to pick off a handful of Republicans, and it can be a different collection of them every time. Republicans need to keep all their members in line every time.

ethicsTo put it simply, Republicans’ grasp on power is a mile wide and an inch deep. That’s opposite of what we saw in the last half of the Obama years, where Democrats had huge power in the executive branch but no power anywhere else.

What can compliance officers take away from this fiasco? First, that for all Republicans’ talk of implementing sweeping new policies, their ability to enact sweeping reform is more limited than you’d think.

Second, the one place where Republicans do have power is in the executive branch. If you want to prepare for change that will affect your regulatory compliance program, look to places like the Securities and Exchange Commission, the National Labor Relations Board, the Justice Department, and industry regulators. Don’t hold your breath worrying about Congress.

The Saddest Point

What should disappoint compliance officers most about this week’s shenanigans is simply the disregard many Republican lawmakers have for a strong ethics function. Dealing with the OCE might be a pain, but then—nobody said being ethical is easy.

You must tolerate anonymous complaints, and you must disclose as much as possible about an investigation after it ends (two practices Goodlatte wanted to end). Any compliance officer worth his or her salt knows this. If a corporate board proposed these sorts of neutering practices for its ethics & compliance function, we’d all be encouraging the compliance officer to seek other employment. A weak function like that wouldn’t even pass muster with the U.S. Sentencing Guidelines.

Worse, only a limited number of Republican lawmakers wanted to push this stunt. Senior GOP leaders in Congress warned against it. Republican senators knew it was a stupid idea. In some parallel world, I can’t imagine a President Mitt Romney ever agreeing to it. The Republicans I know personally would be appalled.

But this is the new legislative era that compliance officers need to monitor, analyze, and prepare for. Start with this rule of thumb: whatever the most ridiculous explanation is that squares with all the facts—that’s probably the correct one.



  1. […] of intense criticism. For additional reading check out Matt’s two blogs on these subjects: Ethics, Politics, and Optics in New Washington and Six Compliance Events to Watch in […]

  2. […] insurance firms. The sponsor of the broader regulatory reform bill is Bob Goodlatte, the same one who tried to gut the Office of Congressional Ethics earlier this month. He’s more in bed with telecom and manufacturing companies than financial […]

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