GOP-led House committee launches working group to combat ESG proposals

Link: https://www.pionline.com/washington/republican-led-house-committee-launches-anti-esg-working-group

Excerpt:

Congressional Republicans on Friday took another step in their quest to dismantle the Biden administration’s environmental, social and governance rule-making initiatives.

The House Financial Services Committee has formed a working group to “combat the threat to our capital markets posed by those on the far-left pushing environmental, social and governance proposals,” the committee’s Chairman Patrick McHenry, R-N.C., announced.

The group will be led by Rep. Bill Huizenga, R-Mich., and include eight other Republican committee members.

Among its priorities, the group will examine ways to “rein in the SEC’s regulatory overreach;” reinforce the materiality “standard as a pillar of the nation’s disclosure regime;” and hold to account market participants who “misuse the proxy process or their outsized influence to impose ideological preferences in ways that circumvent democratic lawmaking,” according to a news release.

“This group will develop a comprehensive approach to ESG that protects the financial interests of everyday investors and ensures our capital markets remain the envy of the world,” Mr. McHenry said in the news release. “Financial Services Committee Republicans as a whole will continue our work to expand capital formation, hold Biden’s rogue regulators accountable, and support American job creators.”

Author(s): Brian Croce

Publication Date: 3 Feb 2023

Publication Site: Pensions & Investments

Testimony Before the Subcommittee on Oversight and Investigations of the Financial Services Committee of the U.S. House of Representatives on “An Enduring Legacy: The Role of Financial Institutions in the Horrors of Slavery and the Need for Atonement, Part Two”

Link: https://financialservices.house.gov/uploadedfiles/hhrg-117-ba09-wstate-darityw-20221207.pdf

Testimony for this hearing: https://financialservices.house.gov/events/eventsingle.aspx?EventID=409969

Excerpt:

The collective amount required to close the disparity for approximately 40 million black American
descendants of persons enslaved in the United States will come to at least $14 trillion. This is a sum that
cannot be met reasonably by private donors or other levels of government. If generous donors created a
fund to eliminate the racial wealth gap by contributing $1 billion monthly, it would take a millennium to
reach $14 trillion. The combined budgets of all state and local governments used to meet all of their
obligations amount to less than $5 trillion.

Financial institutions were key supporters and beneficiaries of American slavery. The full scope of
creditor-debtor relationships interlocked with the slave plantation system has yet to be documented
adequately. For the record details are needed about which organizations were the financiers for the
New England textile industry, which bank or banks had Brooks Brothers, producers of “plantation wear”
for both the enslaved and the enslavers, as a client, and who were the lenders to the southern planters
themselves. This will require thick archival research that has yet to be undertaken.


It is now well established that a number of existing insurance companies participated significantly in
providing slaveowners with contracts to protect them for financial loss in the event of death or damage
of their human property, particularly their highly skilled property These include New York Life, known as
the Nautilus Insurance Company in the antebellum period, Aetna, Baltimore Life, Southern Mutual
Insurance Company, the Loews Corporation, and AIG.


Lloyd’s of London and RSA Insurance Group the point before the overseas slave trade was declared
illegal, insurance companies routinely protected voyages to procure captive Africans. British insurers
figured prominently, especially Lloyd’s of London and the RSA Insurance Group , in the form of one of its
ancestor business, London Assurance.

….

During the course of approximately 100 white terrorist assaults on black communities from the Civil War
to the 1940s, black lives were taken and black owned property was seized or destroyed by the white
mobsters. Black property owners who lived through the massacres rarely received any form of
compensation, particularly from insurance companies with whom they held policies.


An estimated present value of $611 million dollars of black-owned property was lost during the 1921
Tulsa massacre. What can best be described as a “Negro clause” in the policies gave insurance
companies the basis for denying the massacre victims’ claims. The “…insurance companies fell back on
an exclusionary clause…that…said insurers wouldn’t be held liable for loss ‘caused directly or indirectly
by invasion, insurrection, riot, civil or commotion, or military or usurped power’” (Council 2021).

Author(s): William Darity Jr., the Samuel DuBois Cook Professor of Public Policy, African and African American Studies, Economics, and Business at Duke University

Publication Date: 7 Dec 2022

Publication Site: House of Representatives, Financial Services Committee

Robinhood, Reddit CEOs to Testify Before Congress on GameStop (GME)

Link: https://www.investopedia.com/robinhood-reddit-ceos-to-testify-in-congress-on-gamestop-gme-5112714

Excerpt:

The Committee on Financial Services of the United States House of Representatives has scheduled a hearing on “recent market volatility involving GameStop [Corporation (GME)] stock and other stocks.” The hearing will be held virtually, starting at 12 noon Eastern Time on Thursday, Feb. 18, 2021. Among those called to testify are Vladimir Tenev, CEO of online trading firm Robinhood Markets, Inc., and Steve Huffman, CEO and co-founder of social media community and online forum site Reddit.1

….

In addition to singling out hedge funds for criticism, it is likely that Robinhood CEO Vladimir Tenev will face hostile questioning about his company’s actions in the GameStop affair. In particular, the committee memorandum notes that payment for order flow (PFOF) has been Robinhood’s chief source of revenue since its inception and that its decision to restrict trading in GameStop and other stocks may have been influenced by its business ties to investment firms that were caught in short squeezes on these stocks.4

The committee memorandum also notes: “In December 2020, the SEC charged Robinhood with making misstatements about the firm’s receipt of payment for order flow and for failing to comply with its duty to ensure that customer trades were executed on the best possible terms. Robinhood’s failure to satisfy its best execution obligations resulted in more than $34 million in aggregate customer losses. Robinhood was censured and agreed to pay $65 million to settle the action.”

Author(s): MARK KOLAKOWSKI

Publication Date: 17 February 2021

Publication Site: Investopedia

Your Regulator Overseers

Link: http://pointsandfigures.com/2021/01/31/your-regulator-overseers/

Excerpt:

As you know, Congress oversees the bureaucracy.  It’s agencies, the unelected bureaucrats that make a lot of the regulations that affect our lives.  Colloquially, you might know this as a part of The Deep State.  The Senate Banking Committee and the House Financial Services Committee oversee the Securities and Exchange Commission (SEC).

The GameStop saga has laid a lot of things bare.  But one thing that needs pointing out is that most of the people on those committees have no clue how the entire financial system as it pertains to exchanges and markets works.  I am not impugning the personal characters of the Senators and House members on the committees.  In 99.9% of the cases they are decent and intelligent people. What I am saying is most of them have no clue when it comes to understanding the industry they are charged with overseeing.   It is rare when you find an elected official that really and truly understands.  Not rare like a four leaf clover rare. Rare like seeing a tiger in the wild rare.

I am not talking about trading markets either as plenty of elected congresspeople seem to know how a brokerage account works. I am talking about understanding the mechanics and plumbing, and truly understanding.

Author(s): Jeffrey Carter

Publication Date: 31 January 2021

Publication Site: Points and Figures

GameStop Frenzy Is Tough Call for Regulators Focused on Transparency

Link: https://www.wsj.com/articles/gamestop-frenzy-is-tough-call-for-regulators-focused-on-transparency-11612693802

Excerpt:

One reason regulators might be stymied is a lack of political will to limit trading by small investors. When Robinhood temporarily blocked its customers from trading GameStop shares during the frenzy, a cry went up about market access. The big losses those little guys inflicted on some hedge funds by bidding up the stock was seen as a democratization of the market. Any effort to derail that could be criticized as protection for Wall Street.

“Most people believe that middle-class people, working people, should be able to take their chances on the stock market,” Rep. Maxine Waters (D., Calif.), who leads the House Financial Services Committee, said in an interview.

The consensus among regulators so far is that the episode didn’t expose major problems with the market’s plumbing. The Treasury Department said Thursday that regulators believe the market’s “core infrastructure was resilient.” The department said the SEC is reviewing “whether trading practices are consistent with investor protection and fair and efficient markets,” and is expected to release a report on the factors that influenced it.

Author(s): Paul Kiernan and Dave Michaels

Publication Date: 7 February 2021

Publication Site: Wall Street Journal