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The Corporate Reform Coalition Remembers Jack Bogle

Last week the investing world lost a giant. John “Jack” Bogle, founder of the Vanguard Group, passed away at the age of 89. He left behind a legacy that changed the way Main Street Americans invest and was never shy about speaking out against excessive Wall Street greed and reckless corporate management.  

In 2016, Bloomberg estimated that Bogle had saved investors more than $500 trillion in fees and trading costs since he founded Vanguard. In addition to re-inventing the way Americans save for retirement with his index fund, Bogle was always outspoken about shareholder rights, putting investors first, and out- of- control Wall Street greed. He railed against corporate CEO’s who make excessively more than their employees and managers who won’t disclose basic things like how the company is planning for climate change or spending its shareholders’ money to influence politics. Bogle went so far as to submit a public comment to the Securities and Exchange Commission (SEC) on the petition for a rulemaking asking the SEC to require corporations to disclose their political spending. He graciously shared his time with the Corporate Reform Coalition to talk about his belief that shareholders should be served first and that if they want disclosure, they should get it.  

Now, coalition partners share their thoughts and reflections on the father of the index fund: 

Jack Bogle’s wisdom, grit, and boldness will be greatly missed. You can read more about his life and work in the Philadelphia Enquirer and watch the interview he did with this coalition on corporate responsibility below. Our thoughts are with his family and friends at this time. 

This post originally appeared on the Corporate Reform Coalition website.
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Congress: Our Democracy Needs More Transparency, Not Less

This week, the Supreme Court affirmed a lower court’s decision that certain nonprofit groups that spend money to support or oppose political candidates need to disclose their donors.

The decision comes as negotiators in Congress decide whether to keep a provision in the federal budget that protects corporations that spend secret money in politics from having to be honest about their spending. Last week, the Corporate Reform Coalition sent a letter urging conferees to remove language from the final appropriations deal that stops the Securities and Exchange Commission (SEC) from finalizing a rule requiring public companies to disclose their political spending to shareholders and the public.

Since the U.S. Supreme Court’s decision in Citizens United v. FEC came down in 2010, corporations have been allowed to spend unlimited undisclosed amounts of money to influence American elections and in turn affect policy outcomes. Noting the danger of “dark money” for both American democracy and the shareholders of the companies that are spending in secret, a strong coalition of diverse allies has been working together since the decision to bring corporate spending in politics into the light.

The members of the Corporate Reform Coalition believe the SEC should be allowed to and encouraged to move forward with the rulemaking that would require public companies to disclose to their shareholders and the public how they spend money in politics. This information is material to investors- the constituency the SEC is responsible for protecting.

The Supreme Court’s decision to give corporations the right under the First Amendment to spend unlimited funds from their corporate treasuries to support or attack candidates is troubling for several reasons, and investors concerned about the value of their investments and citizens concerned about the future of American democracy are looking to the SEC to take the action that so many investors have demanded and require disclosure of political spending.

Without direction from the SEC, there are no rules or procedures established in the United States to ensure that shareholders – those who actually own the wealth of corporations – are informed of, or have the right to approve, decisions on spending their money on politics. Investors want more disclosure in order to make sound investment decisions. That is why 1.2 million comments- the most in the agency’s history- have come into the SEC on this rulemaking petition from diverse stakeholders including the founder of Vanguard, John Bogle, five state treasurers, a bi- partisan group of former SEC chairs and commissioners, and investment professionals representing $690 billion in assets.

The rider blocking the SEC from making progress on this rulemaking was inappropriately included in the appropriations process, and the budget should be free of any partisan, poison pill policy riders. Disclosure of a corporation’s political spending is good for business and good for our democracy. Congress should not stop the SEC from finalizing this important disclosure rule.

This post originally appeared on the Corporate Reform Coalition website.

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Big Money Riders Threaten Spending Bill’s Passage

Illinois is no stranger to the influence of moneyed special interests in our elections. The 2018 gubernatorial race is shaping up to be one of the most expensive in history. And this spring’s Democratic primary saw small-donor funded and campaign finance reform champion, Daniel Biss, lose to Hyatt hotel heir J.B. Pritzker, who poured $100 million of his own money into the race. Pritzker’s Republican opponent, Governor Bruce Rauner, is not far behind with a $30 million price tag for his campaign so far.

Our country is under the thumb of wealthy special interests, especially the big banks. Despite the fact that most regular Americans are still recovering from the 2008 Wall Street crash, Congress approved a major rollback of financial industry safeguards in May. Even though our elections keep getting more expensive and we know that Russia meddled in the 2016 elections, Congress still refuses to fix our broken campaign finance system. Now, Republicans in the U.S. House of Representatives are poised to make things even worse.

Republican lawmakers have attached 50 separate banking deregulation bills to the Financial Services and General Government (FSGG) appropriations package that is slated for a vote on the House floor this week. These poison pill policy riders have nothing at all to do with funding our government and would do enormous harm to investors, borrowers and taxpayers.

One provision adds an entirely new banking agency where wayward bankers could appeal investigative findings by any of the existing financial regulatory agencies, forcing those investigations to begin again from scratch. Other poisonous riders would weaken enforcement of the Volcker Rule, which restricts banks from gambling with taxpayer backed deposits, and restrict the U.S. Consumer Financial Protection Bureau’s ability to safeguard Illinois consumers and consumers everywhere from financial predators.

The FSGG spending bill also contains measures blocking campaign finance laws. One would block the U.S. Securities and Exchange Commission from finalizing a rule requiring publicly traded companies to disclose their political spending to shareholders and the public – a rule supported by more than 1.2 million investors and citizens. Another ideological rider would stop the IRS from enforcing current law that prohibits churches from getting too closely involved in electoral politics. Worse, another provision stops the IRS from creating a clear definition of “political activity” for nonprofits.

As the ranking member on the FSGG appropriations subcommittee, U.S. Rep. Mike Quigley (D-Ill.) already has spoken out against harmful policy riders like these. It is important that he continue to do so, particularly as the appropriations process moves into its final stages in the weeks ahead.

The U.S. Senate’s version of the FSGG bill is free from some of the worst harmful riders, reflecting Senate Republicans’ desire to return to regular order and the recognition that poison pills riders are a major obstacle to any final deal. The House and Senate bills soon will be reconciled in a rarely-seen conference committee. The voices of House lawmakers, especially top appropriators like Quigley, will give added leverage to the conference committee members who are fighting to remove poison pill riders from the final bill.

Now is the time for Quigley to speak out and for voters who care about getting our politics out from under the thumb of big money to make their voices heard.

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Curley is the democracy associate for Public Citizen’s Congress Watch division. She grew up in Chicago.

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The Omnibus: Which key democracy poison pills are in and which were kept out

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After months of negotiations Congress finally passed the massive omnibus spending bill last week, and on the whole, the final bill ended up being free of some very bad proposed provisions that would have harmed our environment, weakened worker protections, and upended our campaign finance system.

A few troublesome riders did slip through that impact our democracy, though, so let’s review.

As the federal spending bills were being drafted for FY18, Conservatives in Congress inserted 5 poison pill riders that had the potential to unleash the worst attack on our democracy since the 2010 Citizens United Supreme Court decision.

The package of anti- democracy poison pills that were included in draft bills would have:

The provisions that actually passed:

The final bill that passed did not include two of these poison pills and also maintained an earlier version of the rider that stops the Securities and Exchange Commission from finalizing the political spending disclosure rulemaking, but allows the agency to still work on the rule. This is a win because recently confirmed Democratic SEC Commissioner Robert Jackson, Jr. is an original author of the disclosure rulemaking petition and should not have his hands tied on this issue.

As a refresher, it is critical to the function of our democracy that companies not be allowed to funnel money into our elections in secret. In order to make an informed decision, voters need to know who is funding the political messages they are seeing, whether it’s a foreign entity, a billionaire, or a company looking to rig the rules in its favor. The threat of foreign influence in our elections is particularly troubling, especially given Russia’s interest in sowing chaos in America’s political system. It’s technically illegal for a foreign entity to spend money in U.S. elections, but given the gaping loopholes in our current campaign finance law, it’s easier than ever for an adversary to funnel money into our elections. Bad corporate actors and industry trade associations looking to gain an upper hand can also secretly influence political messages, tricking voters into thinking that a political message has strong public support when in fact a special interest is paying to convince voters of the merit of its cause. This is why we need strong transparency laws that ensure voters know exactly who is funding our politics.

Being transparent is also good for business. If a company chooses to engage in the policy making process for the sake of their business there should be no reason why they would want to hide that critical information from their shareholders and customers. Additionally, having a strong oversight policy helps a company shield against a politician’s shakedown. In the face of a politician offering special access or corporate- friendly policies in exchange for secret support for the politician’s or party’s agenda, an executive can cite the company’s policy of disclosing its political activity and sidestep any unsavory dealings.

There is already significant investor demand for political transparency from companies. For years, shareholders have been filing resolutions at major companies asking them to disclose their election spending and lobbying. This year, shareholders have filed about 80 resolutions asking companies to be honest about their engagement in politics.

While the fight over this year’s omnibus spending bill is over, there is little time for rest as negotiations around the bill for 2019 will start up soon, and Conservatives are likely to continue to use the inappropriate tactic of inserting major policy provisions into the bill in order to pass them under the radar. It is critical that language preventing the SEC from finalizing the corporate political spending disclosure rulemaking come out of the next bill so that the agency can finish this critical transparency measure.

 

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Nearly 30,000 Americans call for Vanguard to hold companies accountable for political engagement

At its recent meeting of shareholders, Vanguard heard from Americans concerned about the mutual fund giant’s role in enabling secret corporate spending in our elections.

This was the first Vanguard shareholder meeting since the Supreme Court’s 2011 Citizens United decision that cracked open companies’ abilities to secretly pour money into our politics. This, therefore, was a very important moment to tell Vanguard that it has a critical role to play in bringing transparency to our democracy on top of the responsibility it has to thoughtfully manage its clients’ investments.

Vanguard caught wind of the petition in the press so they knew that we would be delivering it at the shareholder meeting. When I arrived at the meeting in Scottsdale I was taken to meet with the Assistant Secretary of the funds in a small conference room away from the main meeting space. I handed over the printed petitions and explained why so many Americans, including Vanguard clients, are calling on the company to support disclosure. Vanguard assured me that the petitions would be delivered to the investment stewardship team who handles the company’s corporate voting.

In response to a shareholder who asked about Vanguard’s proxy voting record on climate risk disclosure during the meeting, Vanguard CEO Bill McNabb highlighted the company’s Investment Stewardship Report that was released this summer as well as Vanguard’s increased engagements with companies on ESG issues. This acknowledgement from the company’s CEO at the meeting, in addition to the company’s willingness to receive our petition is an encouraging sign that it takes its responsibility to engage with the companies where its clients’ money is invested seriously. However, in his response to the presentation by the proponent for the shareholder proposal on divesting from companies that enable genocide McNabb argued that it is not Vanguard’s role to attempt to change the companies where it is invested. This is counter to the movement on investment stewardship and to Vanguard’s motto of “do the right thing,” and the company needs to realize that it cannot sit passively by on any issue. Calls for Vanguard to change the way it votes its proxies on climate risk disclosure, political spending and lobbying disclosure, and all other ESG issues were echoed by Walden Asset Management at the very end of the meeting.

The more than 27,500 petitions calling on Vanguard to support political spending and lobbying disclosure were collected by Corporate Reform Coalition partners the Sierra Club and Public Citizen, among others.

“In order to ensure every American has access to clean air, clean water, and a safe community, we must have a clean democracy free of secret money polluting our elections, said Courtney Hight, the Director of the Democracy Program at the Sierra Club. “The Sierra Club calls on Vanguard and will continue to call on any group that refuses to free our democracy from the stranglehold of corporate influence.”

“What Vanguard needs to realize is that with great power comes great responsibility,” said Lisa Gilbert, Vice President of Legislative Affairs at Public Citizen. “The mutual fund company has a responsibility to its clients to ensure that public companies it invest in are not using company money to influence politics without making that information available to shareholders.”

Since the detrimental Citizens United decision, which opened up the flood gates for corporations to pour secret money into our elections, shareholders have been putting forth resolutions at major companies asking their companies to be honest about money they spend to influence politics. While more than halfof the S&P 100 companies have moved to disclose because of this pressure the resolutions themselves rarely get majority votes. This is because major mutual fund companies like Vanguard control a large percent of voting shares and choose not to use them to support this kind of disclosure.

Vanguard’s voting record on political spending and lobbying disclosure proposals is abysmal. It almost always votes against or abstains from voting for these proposals. A recent Public Citizen report found that if Vanguard alone had changed its voting in 2016 to support the political spending disclosure proposals, overall support for the proposals would have increased 2.48 to 13.68 percentage points and proposals at NextEra Energy Inc. and NRG Energy Inc. would have reached majority support.

Vanguard claims to act solely in its clients’ best interest and to be guided by a simple statement: “Do the right thing.” The recent shareholder meeting was a chance for the company to hear from its investors: the Americans who trust Vanguard with their retirement savings and who are also the company’s shareholders. Vanguard should listen to the over 27,500 petition signers plus the 65,000 Americans who have written to the company in the past and change the way they vote. As the second largest mutual fund in the country and an entity responsible for the retirement savings of so many Americans, Vanguard should “do the right thing” and support political spending and lobbying disclosure.

To read more about the Coalition’s Vanguard work, including an interview supporting political spending disclosure at public companies with Vanguard’s founder, Jack Bogle, visit our campaigns page: www.corporatereformcoalition.org/campaigns.

This post originally appeared on the Corporate Reform Coalition website.

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