When Hal Scott testified on financial reform before the Senate last February, he identified himself simply as a Harvard Law School professor and director of an independent research group.
He also had some other relevant experience: Scott is on the board of Lazard, a prominent Wall Street firm with no small interest in the outcome of regulatory reform. He did not bother to mention this association during his testimony.
Scott, who was paid about $260,000 in cash and stock by Lazard in 2009, did not break any rules by not pointing out his industry ties. The Senate Banking Committee does not require academics to disclose their corporate affiliations.
"My membership on the Lazard board is a matter of public record," Scott said in response to an email request for comment.
A growing number of critics are calling for change. They argue that disclosing industry relationships should be mandatory for academics who appear before the people's elected representatives as independent experts. After all, these critics say, congressional testimony is a key step in the legislative process and can have enormous sway on policy.
"If someone is presented as a disinterested expert, but they actually have a financial relationship with someone with an interest in what they are talking about, that leaves the members of the public in the dark and sometimes members of the committee as well," said Bill Allison, editorial director at the Sunlight Foundation.
Fannie Mae (FNMA), the mortgage-financier seized by U.S. regulators in 2008, will pay the Treasury Department...
