May 13, 2010

Senator
United States Senate
Washington, DC 20510

HOLD CORPORATE BOARDS AND MANAGEMENT ACCOUNTABLE:
OPPOSE AMENDMENTS TO STRIKE CORPORATE GOVERNANCE  PROVISIONS

Dear Senator:

The over 250 consumer, employee, investor, community and civil rights groups who are members of Americans for Financial Reform (AFR) write to express strong opposition to amendments #3860 (Carper), #3861 (Carper) and #3944 (Corker).  We urge you to address the serious failures of corporate directors revealed amid the financial crisis by voting NO on these amendments to strike vital corporate governance provisions from financial regulatory reform legislation.  The provisions at stake (sections 971, 972) will facilitate efforts by shareholders to  remove poorly performing directors and nominate alternative candidates.

The global financial crisis represents a massive failure of board oversight. Far too many corporate boards disregarded the interests of their shareowners, whether due to a lack of understanding, monitoring and overseeing risk, or by structuring and approving compensation packages that encouraged excessive risk-taking and produced outsized rewards – with little or no downside for risk – for short-term results.   Financial regulatory reform must address this fundamental lack of accountability and market discipline.

Corporate boards are the first line of defense against the risks and excesses that led to the global financial crisis. While more vigorous government regulation certainly is necessary, vigorous regulation alone cannot address all of the abuses that led to the crisis.  Improving the way companies govern themselves must be part of the financial overhaul package.  By empowering long-term investors to hold corporate directors accountable, provisions regarding proxy access (972) and majority voting (971) would help combat “short-termism” and excessive risk-taking and address the failures of board oversight that contributed to the financial crisis.

Few meaningful remedies are currently available to shareowners dissatisfied with management and board performance at U.S. public companies. Today, shareholders in America’s corporations have limited options when it comes to protecting themselves and the long-term sustainability of the companies they own. By and large, the rules and regulations governing the capital markets deny shareholders a meaningful voice in overseeing corporate directors and in holding directors accountable.  Americans for Financial Reform shares President Barack Obama’s view that important reforms are needed to “give shareholders new power in the financial system…so that investors and pension holders have a stronger role in determining who manages the companies in which they’ve placed their savings.”

As part of a broad financial regulatory overhaul, corporate governance reform in the long run will help foster genuine market discipline leading to more prosperous companies, more stable jobs, and a more secure retirement for American workers.  We urge a NO vote on amendments #3860, #3861 and #3944.

Sincerely,

Americans for Financial Reform