U.S. Sen. Dan Sullivan testified before the Senate Banking Committee today on the challenges posed by large asset managers that wield the enormous voting power of millions of passive index fund investors to control “virtually every large U.S. corporation.”
Sullivan spoke on the legislation he introduced last month—the Investor Democracy is Expected (INDEX) Act—that addresses problems stemming from the consolidated voting power within Wall Street’s largest investment advisers.
“The impetus for this legislation was due to my ongoing frustrations with many of America’s largest banks and insurance companies that undertook policies to start blackballing oil and gas investment development in Alaska,” Senator Sullivan said to the Senate Banking Committee. “At the same time, these financial institutions, banks, and insurance companies were eagerly and continue to eagerly do business with Communist China. . .These financial institutions do this in part because of pressure from their largest shareholders, the big three investment advisors, and their index funds.”
Sullivan’s legislation is in response to the hypocrisy of America’s largest banks black-balling oil and gas development in Alaska and across the country while propping up the Chinese Communist Party, even as American families face record-high energy costs. This initial frustration uncovered a much larger concern about the sheer power that is consolidated among the three largest investment advisers: BlackRock, Vanguard, and State Street.
The INDEX Act would require investment advisors of passively-managed funds to vote in accordance with the instructions of fund investors—not at the discretion of the adviser. Deconsolidating this voting power will neutralize the dominance of these investment advisers and foster a healthier, more competitive, and more democratic corporate governance system.
“At its core, the INDEX Act is politically and policy-neutral focused instead on the very real and unprecedented power amassed by the big three investment advisors that should be a concern for us all,” Sullivan said. “It would return voting power back to the beneficial owners of the shares, not the index fund managers. In many ways, it’s a logical next step that was undertaken by Dodd Frank when broker-dealers used to be allowed to vote shares they held in street name. It would neutralize the massive power that the largest investment advisors have amassed and it would empower the real beneficial owner of these shares. It would foster a healthier and more competitive and democratic corporate governance system, which is what we should want and certainly what the American people expect.”
Original cosponsors of Senator Sullivan’s legislation include: Senators Pat Toomey (R-Pa.), Mike Crapo (R-Idaho), Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Kevin Cramer (R-N.D.), Bill Hagerty (R-Tenn.), Marco Rubio (R-Fla.), Thom Tillis (R-N.C.), Steve Daines (R-Mont.), Cynthia Lummis (R-Wyo.), John Kennedy (R-La.), and Rick Scott (R-Fla.).
Don’t believe a word you hear from Sullivan. He is a part of Pelosi thinking.
I think his co-sponsors would strongly disagree with that assessment. This is an attempt to solve a very real problem – is it perfect? Not likely, and there are always unintended consequences – but it is a great effort toward moving forward from the monopolies.
The big banks, corporations, etc are deliberately trying to squish the middle class.
They need feudal serfs to serve the oligarchs.
Yet another example of why we needs guns, and the fervent desire of the oligarchs to take them from us.
He got that right. Black Rock, Vanguard and State Street are at the bottom of the dog pile, but Democracy is just rule by the uninformed masses. Individuals have no rights under Democracy.
Maybe I should say misinformed masses.
What, Lisa Murkowski is not a co-sponsor?
He might not want her name next to his.
The list of co sponsors are Wall Street minions. Not likely they have the common people as a priority.
Moderation , is that what Putin calls controling the press. Dan can not run from the truth for ever.
I wonder if any of these leftist banks and investment advisers are involved with our Permanent Fund.
Until two years ago conservative Republicans opposed Dodd Frank, memories are as short as a FOX news cycle these days. Note FOX is the network that loves the new Saudi Arabia sponsored golf tour, but criticizes Biden for going to Saudi Arabia to lower gas prices
I’m sorry, Frankly Rancid, was there some argument or point hiding in this word salad of radical leftist talking points and gibberish?
The elite power families & these financial companies have a global control that has been ongoing through out the world going back many many years. Many have been asleep to their manipulations & control but grateful many are waking up. ESG is a cancer that will bring ruin to our republic & turn us into China. It must be stopped.
Thank you Senator Sullivan. The cabal controlling investments and steering them away from America’s (and Alaska’s) energy prosperity need to be reigned in. This is good legislation.
BlackRock, Vanguard, and State Street will rush to invest in Alaska just because Sullivan’s Law sticks its nose under their corporate tent?
What about enforcement; who, how, what makes Sullivan’s Law serious?
Mob got busted with RICO, J.P. Morgan got busted with Sherman Antitrust, but that stuff won’t work on BlackRock, Vanguard, and State Street,?
In this era of “laws for thee and not for me”, why should BlackRock, Vanguard, State Street, and their Senate employees care?
The same executive branch who tried to depose a sitting president, floods the country with illegal aliens, threatens parents with domestic terrorism charges will enforce Sullivan’s Law?
Sullivan’s Law won’t make environment, social, and governance (ESG) reporting go away.
ESG’s how investors, employees, stakeholders find out how companies impact their world, figure out company value beyond financial performance. The SEC prosecutes fraudulent ESG reporting because it’s that important.
ESG’s all about company resource use, diversity policy, societal impact which matters when your company wants socially conscious investors, global relationships, and the best and brightest talent.
Global businesses require suppliers to show they meet ESG obligations and they share that information.
So Sullivan’s Law plops right in the middle of corporate governance, demanding pure corporate democracy, regardless of unintended consequences
… like corporate executives facing Sullivan’s Law violations because their fiduciary duty requires them to disinvest from Alaska if their socially conscious investors “vote” to do so.
Want to grab somebody’s attention, Senator, why not propose these:
(a) remove BlackRock as main financial administrator of the federal government’s Covid-19 stimulus package;
(b) forensic accounting of Covid-19 stimulus package spending which the federal government gave BlackRock exclusive right to administer;
(c) order the Teasury Department Inspector General to investigate and report origins of the $1.2B federal grant (not loan) to AstraZeneca’s for-profit vaccine develoment;
(d) subpoena John Kerry, Climate Ambassador, to explain why he “wants America’s banks on board with the administration’s climate goals”, explain how this top government official will “leverage his personal ties with Wall street to persuade Citi, wells Fargo, Bank of America, Morgan Stanley, Goldman Sachs, and J.P. Morgan Chase to create a U.S. net-zero banking alliance” reportedly aimed at “drawing pledges that could be announced for the administration’s climate energy rollout.” is -not- intentionally antithetical to Alaska’s best interests. (“Kerry Leans on Wall Street”, Politico, 12 March 2021).
(e) subpoena former Governor Bill Walker to disclose agreements made with Communist Chinese officials during his China visit, which may be a red flag to world-class investors if the Chinese are staking their claim to Alaska.
(f) subpoenaing Alaska’s election officials to explain why Alaska’s very easily corruptible election system, clearly a poor reflection on the political stability of its government, would be attractive to investors in the first place.
Acquire enough bold, inescapable facts, you could be a hero, Senator… sponsor a law cutting the BlackRock, Vanguard, State Street team down to size, nobody’ll have to worry about where they do or don’t invest.
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