Biden veto lets fund managers put politics over investors

More than halfway through his four-year term in office, President Biden is expected to issue his first veto: to block a bipartisan bill requiring fund managers to maximize financial returns for investors rather than compromise them to pursue objectives like fighting global warming and pursuing social justice.

The Trump-era rule was simple: plan fiduciaries were required to make their investment decisions solely based on “pecuniary factors,” meaning the financial interests of plan participants. Biden’s rule is the opposite: “a final rule that allows plan fiduciaries to consider climate change and other environmental, social and governance factors when they select retirement investments.”

Majorities in the House and Senate favored the Trump approach, with one Democrat in the House (Jared Golden of Maine) and two in the Senate (Joe Manchin of West Virginia and Jon Tester of Montana) crossing party lines to get the bill, HJRes30, onto Biden’s desk.

Biden Labor Dept. official Lisa Gomez claimed the Biden rule is actually good for investors: “Climate change and other environmental, social and governance factors can be useful for plan investors as they make decisions about how to best grow and protect the retirement savings of America’s workers.” Democratic Senate Leader Chuck Schumer advanced a similar argument: “America’s most successful asset managers and financial institutions have used ESG factors to minimize risk and maximize their clients’ returns.”

This argument is both wrong and self-refuting. Wrong, because the available data shows companies that prioritize their environmental, social, and corporate governance (ESG) scores underperform the market. An analysis by 2ndVote Analytics found that the 221 politically neutral companies in the S&P900 outperformed the market significantly since mid2021: up 2.9% while the overall market was down. Over the last 10 years, neutrals are +334% while the overall market is +230%.

Former Blackrock executive Terrence Keeley soured on ESG because, he wrote in 2022: “an investor who put $10,000 into an average global ESG fund in 2017 would have about $13,500 today, compared with $15,250 he would have earned if he had invested in the broader market.”

Seminal research by NYU professor Aswath Damodaran concluded: “There is a weak link between ESG and operating performance (growth and profitability), and while some firms benefit from being good, many do not. Telling firms that being socially responsible will deliver higher growth, profits and value is false advertising.”

The argument that ESG is good for investors is self-refuting because if it were true that using ESG factors drives superior returns, then Democrats would be perfectly happy with the Trump rule’s requirement that they consider only pecuniary factors – precisely what Biden is wielding his veto pen to avoid.

The real Biden agenda is to advance a left-wing political ideology on everything from fossil fuel restrictions (pushing energy prices higher in the name of global warming) to radical gender and critical race theory by leveraging woke capital.

The unfortunate casualty will be the retirement security of Americans, as their accounts are steered towards companies that have higher ESG scores rather than better financial prospects.

A Biden veto is, unfortunately, likely to be sustained. But Republicans in Congress owe it to their constituents to keep pressing this issue and attach it to must-pass bills until they either restore the commonsense principal that fiduciaries are required to maximize financial returns, or at least make clear to the American people that Biden and his Democratic allies are responsible for sacrificing their retirement income on the altar of politics.

Phil Kerpen is the president of American Commitment and the author of “Democracy Denied.” Kerpen can be reached at phil@americancommitment.org.

In the 31 years I’ve written this column on a weekly basis, I’ve made mistakes. I’ve written things I’ve later – or even quite quickly – regretted. My cutting sense of humor has sometimes cut too deeply and done more damage than I intended.

I pretty much gave up writing satires several years ago because I had various publishers and editors at this publication tell me that, while those parodies made some readers livid, other folks believed that I truly thought Donald Trump should be dictator of the world for life or that homosexual teens should be beaten over their heads with King James Bibles until they went straight.

Here’s something I’ve never done, though. I’ve never lied to consumers of this column about who I am or how I really feel. I am who I am, warts and all. (And I sometimes do have warts. Ask my dermatologist.)

I’ve never taken a stance I didn’t believe in solely to up the profits of this newspaper or the media companies to which it has belonged. In fact, I’m sure some publishers and CFOs of this newspaper would say I’ve cost this organization pots of money over the years directly because of columns I’ve had published.

So I’m not like Fox News primetime hosts Tucker Carlson, Sean Hannity or Laura Ingraham. They are fakes and liars. They lied to their viewers about what they thought about Trump in general and about Trump’s trumped-up claims of a corrupt election. They knew that the claims of Trump, his lawyers and various other flunkies that the 2020 election was stolen were blatantly false.

Yet they lied to their viewers, just to mollify their viewers and to keep their stock shares in Fox’s enterprises high. To keep viewers from continuing to flee to Newsmax or One America Network, they allowed election deniers and conspiracists to come on their shows and tell what Carlson, Hannity and Ingraham knew were lies.

This has all come out in a lawsuit brought against Fox News by Dominion Voting Systems for allowing lies about Dominion to flourish on Fox News. Internal communications between Ingraham, Hannity, Carlson and others at Fox have been revealed as part of the lawsuit. Those have proven that the hosts didn’t believe what they or others on their programs were saying about Trump and election fraud.

In the internal communications, Fox Business host Maria Bartiromo appears to be the least dishonest among the high-profile hosts. She genuinely seems to buy into the lies being propagated by Trump and his lackeys. She comes across a true believer in the Trump cult … a fool maybe, but a true believer indeed.

Carlson is the biggest prevaricator of all. His texts and emails reveal he thought Trump is “good at destroying things” and “demonic.” Carlson wrote privately of Trump: “I hate him passionately.” He stated in his internal Fox communications that he was overjoyed that the day he would no longer have to cover Trump would soon be upon him: “We are very, very close to being able to ignore Trump most nights. I truly can’t wait.”

Then Tuck-Tuck, after having a porterhouse of hypocrisy for dinner, would go on-air and both praise Trump and support the election fraud allegations. Now, after exclusively being given security footage by House Speaker Kevin McCarthy, Tucker the Fibber is on-air making up whoppers about how most of the January 6 attackers were peaceful tourists casually strolling through the Capitol.

I do not have anywhere near the audience for my opinions that Tucker Carlson has for his. I do not have the influence on the national discourse or national affairs that Tucker Carlson has. I certainly don’t come from a fabulously rich, old-money, patrician family, as Tucker Carlson does.

But I don’t lie to my audience about how I truly feel or what I truly believe, so I do have Tucker Carlson on that one.

Bret Kofford is a screenwriter and lecturer emeritus in writing and film from San Diego State University Imperial Valley. He can be reached at bmkofford@ outlook.com.