Leahy Pushes Financial Reform Amendment to Protect Whistleblowers, Transparency

Sen. Patrick Leahy (D-Vermont) proposed an amendment to the financial reform bill Monday that would further protect whistleblowers’ identities while eliminating language that would “indefinitely shield critical information” in financial fraud cases from the public.

The bill, first introduced by Senate Banking Committee Chairman Christopher Dodd (D-Connecticut), includes sections to encourage whistleblowers to come forward. However, if regulators decide not to act on the information, these same sections would keep the information confidential. If the whistleblower faces backlash from the company, this would also prevent him or her from accessing the government records and information necessary to file a retaliation claim.

Additionally, as several watchdog organizations including the Project on Government Oversight and Citizens for Responsibility and Ethics in Washington noted in a letter to Senator Dodd, these measures are unnecessary. As the Freedom of Information Act (FOIA) already adequately protects whistleblowers, the organizations argued it has “stood the test of time” in “fairly and effectively” balancing such individuals’ confidentiality with transparency for 40 years.

Leahy’s proposal follows an amendment filed jointly with other members of the Senate Judiciary Committee, of which he is the chairman. Co-sponsored by Sens. Chuck Grassley (R-Iowa), Arlen Specter (D-Pennsylvania) and Ted Kaufman (D-Delaware), the provision will increase law enforcement resources to go after financial and securities fraud while strengthening whistleblower protection.

“While average Americans were suffering, many Wall Street investment banks and insurance companies went to great lengths to hide their shaky finances from stockholder and government regulators,” Leahy said in a statement. “This underscores the importance of ensuring that whistleblowers are provided the necessary protections to come forward with allegations of financial fraud.”

Leahy has worked on other measures to improve federal government transparency. Last week, the Senate unanimously passed the Faster FOIA Act, co-authored by Sens. Leahy and John Cornyn (R-Texas), which addresses delays and growing backlogs in government responses to FOIA requests. First introduced in 2005, the act will create a bipartisan commission to look at the causes of such delays and make recommendations to improve request response time.

The two senators also introduced the OPEN FOIA Act, passed in 2009, which requires Congress to clearly state when it will include FOIA exemptions in legislation instead of allowing lawmakers to quietly slip them into bills.