President Joe Biden is expected to veto a the Congressional Review Act disapproval of his rule that makes retirement fund managers into political actors, investing according to the whims of ever-changing environmental, social, and corporate governance goals.
The CRA disapproval passed the House earlier, and passed the Senate by a vote of 50-46 on Wednesday.
The resolution is aimed at protecting the retirement accounts for millions of Americans, who don’t realize their fund managers can invest for climate goals, rather than manage workers’ retirement accounts for financial returns and retirement security.
The bipartisan vote in Congress to roll back the Department of Labor Pension Fund rule was the last chance Congress had to undo the damage done to retirement funds of senior citizens and workers of America.
Two Democrats from red-leaning states — Sen. Joe Manchin of West Virginia and Sen. Jon Tester of Montana — voted in favor of the measure that had been introduced by Sen. Mike Braun of Indiana.
The White House has said that Biden would veto it, and White House Press Secretary Karine Jean-Pierre said the CRA would give investment professionals less flexibility to make “prudent decisions” and “forces MAGA Republican ideology down the throats of the private sector.”
“On December 1, 2022, DOL issued a final rule on ‘Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.’ This rule clarifies that retirement plan fiduciaries may consider climate change and other environmental, social, and governance factors in selecting retirement investments and exercising shareholder rights, when those factors are relevant to the risk and return analysis. The rule reflects what successful marketplace investors already know – there is an extensive body of evidence that environmental, social, and governance factors can have material impacts on certain markets, industries, and companies. Such factors also can be a deciding factor among investments that equally serve the financial interests of the plan over the appropriate time horizon and that put the interests of the plan participants and their beneficiaries first and the federal government should not restrict that choice for plan managers. DOL issued the final rule after receiving extensive feedback from the public that revealed that the previous Administration’s rules in this area created problematic impediments for plan fiduciaries seeking to act in the best interests of America’s workers when making investment decisions,” the White House said in a prepared statement.
The congressional resolution takes the rules back to how they were originally designed by Congress when the Employee Retirement Income Security Act of 1974, which set minimum standards to provide protection to individuals in voluntarily established retirement plans.
The Biden rule makes climate change the client, and workers have no protection from the government against activist investment managers who decide they don’t like oil, or who allow their ideologies to take over their investment decisions.
“Generations of policymakers have worked hard to protect workers from having their pension money gambled away by investment professionals. Longstanding federal policy required pension fund fiduciaries to invest solely for the financial benefit of retirees (and future retirees), but now the Department of Labor wants to change the rules so that investment managers can use pension funds to promote unrelated social and environmental activist goals instead. That’s dangerous, irresponsible, and in direct violation of the law that has protected the pensions of working Americans for roughly half a century,” the Competitive Enterprise Institute said on its website, in response to the Biden pending veto.
“The bipartisan vote in Congress to roll back the current, misguided Department of Labor pension fund rule should be affirmed by President Biden, not vetoed. By opposing it, the president puts himself on the side of arrogant activists in the financial world who think they have the right to play politics with the retirement future of millions of Americans. President should stand with hard-working retirees instead,” the group said.