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Transparency: Obama Admin Rolls Back Conflict of Interest Disclosure for Unions

Finally, the administration finds a regulation they deem worthy of repeal.

2:00 PM, Nov 2, 2011 • By MARK HEMINGWAY
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Though the Obama administration labor department had already stopped enforcing the requirement that union bosses fill out LM-30 forms listing potential conflict of interests, now we get word that the Obama administration is rolling back the relevant regulations altogether. However, the announcement of this rule change is baffling:

The new rule promotes transparency by requiring union officials to disclose payments and interests that involve actual or likely conflicts between the official’s personal financial interests and his or her duties to the union. The department intends to engage in compliance assistance and enforcement efforts to ensure proper reporting by union officials.

The new rule avoids unnecessary intrusions into labor-management relations by removing requirements to report transactions that create no actual or likely conflicts of interest. The rule announced today reverses one published in 2007 that expanded the length and complexity of the LM-30, but did not lead to additional useful information being reported by union officials.

Sean Higgins at Investor's Business Daily observes that this announcement grossly mischaracterizes what is happening:

That is Orwellian. The passage implies that conflict of interest disclosure requirements have been enhanced. Careful readers will note though that the release admits that the new rule “reverses” earlier changes “that expanded the length and complexity” of the legal requirements, arguing they “did not lead to additional useful information.”

Similarly, what exactly “promotes transparency” when a rule change “removes requirements to report transactions” that were previously “being reported by union officials”? That sure sounds like reducing the amount of information being made public, which is exactly the opposite of what of transparency means.

Earlier this year, I noted in the pages of THE WEEKLY STANDARD why these transparency requirements are so significant:

The Bush administration was arguably the first to require unions to make meaningful financial disclosure, and their leaders to report conflicts of interest. The change had tangible effects. An unassuming Safeway bakery clerk was elected head of a powerful Denver grocers’ union in 2009 after she revealed that the union’s influential leader had put two relatives on salary for six figures and was using union dues to support a lavish lifestyle that included hefty bar tabs and NFL tickets. The corrupt union boss’s ouster was made possible because the Bush Labor Department for the first time had mandated itemized expenses and staff salaries on the LM-2 union financial disclosure form.

That might be the first and last union election, however, where financial transparency plays a decisive role. Since then, Obama’s labor secretary Hilda Solis has rolled back Bush administration LM-2 transparency requirements and stopped enforcing the requirement that union bosses disclose on form LM-30 whether they’re being paid on the side by companies doing business with the union. (In 2004, unions filed 96 LM-30 forms. In 2005, that number was 13,326, thanks to the Bush administration’s enforcement efforts.) The Obama administration has also stopped requiring financial disclosure for oft-abused union trusts or strike funds.

The administration's desire to do away with union transparency requirements amounts to a craven appeal to union bosses -- who make the decisions about spending the campaign war chest -- at the expense of actual union members. At a time when union pension plans are cratering and union membership is in a death spiral, the Obama administration wants to make it harder for union members to hold labor bosses accountable for their mismanagement.

Right now, various leftist groups, with the blessing of the Democratic party, are occupying Wall Street because they say the government hasn't done enough to hold elite bankers accountable for ruining the economy. Similarly, organized labor has been in a state of crisis for years, in no small part due to the endemic corruption among the wealthy and politically-connected union organizers at the top. Transparency would likely serve to strengthen unions in the long run, but the Obama administration's desire to roll back transparency requirements seems to suggest Democrats have little interest in the long-term health of the labor movement beyond how much cash they can extract for the next election.

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