Obama White House Shafts Another Ally
by Deacon Blues
Well, the Wall Street boys inside the White House are happy to do the bidding of the Business Roundtable, and protect Wall Street from shareholder proxy efforts to rein in executive compensation, even if it means driving a stake through the heart of institutional investors around the country like CalPERS.
The White House is intervening at the last minute to come to the defense of multinational corporations in the unfolding conference committee negotiations over Wall Street reform.
A measure that had been generally agreed to by both the House and Senate, which would have affirmed the SEC's authority to allow investors to have proxy access to the corporate decision-making process, was stripped by the Senate in conference committee votes on Wednesday and Thursday. Five sources with knowledge of the situation said the White House pushed for the measure to be stripped at the behest of the Business Roundtable. The sources -- congressional aides as well as outside advocates -- requested anonymity for fear of White House reprisal.
Unfortunately, this White House has spent the last several months telling institutional investors and Democratic members of Congress that it supported this reform, only to toss it overboard at the end to please people who aren’t your allies anyway and will still give their money to the GOP opposition.
"We're just horrified that the Senate would try to weaken language that was similar in both bills. To set such a high threshold makes the reform totally unworkable," said Ann Yerger of the Council of Institutional Investors.
"It is very, very costly for investors to mount a proxy contest and to solicit votes against directors. Proxy access changes that by giving investors -- the owners of the business -- the same access to the proxy as management has for purposes of nominating a director," said Lynn E. Turner, the Securities and Exchange Commission's chief accountant from 1998 to 2001. "It is extremely important [that] to avoid systemic risk investors be able to hold boards accountable. Otherwise, board members see no upside, only downside, to ever opposing management or putting the tough questions to them."
In other words, the Obama White House just did to institutional investors what it did to its political base with the public option on health care reform.
Hat tip to Ryan Grim and the Huffington Post