FOR IMMEDIATE RELEASE
Oct. 30, 2024
CONTACT
Carter Dougherty, carter@ourfinancialsecurity.org
Labor Pushes for Limits on Asset Manager Influence Over U.S. Banks
Investors, advocates join union efforts to boost oversight of Wall Street behemoths
Washington, D.C. – Today, 38 labor unions, investors, and advocates submitted a letter to the Federal Deposit Insurance Corporation (FDIC) in support of a proposed rule that would increase oversight of asset managers with substantial voting power in banks. The proposal would bolster FDIC oversight when asset managers gain control of over 10 percent of voting securities of bank holding companies with FDIC-supervised subsidiaries.
“The FDIC is, thankfully, tackling the significant implications of asset manager concentration and ownership of banks,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund. “Regulators need to catch up to the reality that the growth and concentration of the asset management industry has fundamentally reshaped how public companies—including listed banks—make decisions.”
Signatories to the letter, available here, include the AFL-CIO, American Federation of State, County and Municipal Employees (AFSCME), the American Federation of Teachers (AFT), Communications Workers of America (CWA), the National Education Association (NEA), and the Service Employees International Union (SEIU).
“We strongly support the FDIC’s proposal to ensure greater transparency and accountability from the largest asset managers,” said AFT President Randi Weingarten. “Our pension funds would be better served by clear guardrails that ensure large money management firms are voting their shares at ‘too big to fail’ banks in the interests of their clients, rather than engaging in ‘under the table’ favor trading that puts steady returns and overall financial stability at risk.”
The AFT Trustee Council has more than 50 members, representing 27 public pension funds with more than $3 trillion under management. Members of the other unions signing the letter include pension fund trustees that also oversee trillions.
The letter’s signatories also highlight that the Financial Stability Oversight Council can designate major asset managers as systemically important financial institutions (SIFIs), which would allow the Federal Reserve and other financial regulators to supervise them and address the risks their substantial ownership stakes of public companies pose to financial stability.
BlackRock has opposed the FDIC proposal, and recently pointed to its track record of voting with management 99.85 percent of the time on proxy items in the 39 publicly-traded bank and savings and loan holding companies that control FDIC-supervised institutions in which it holds substantial stakes. Large asset managers have frequently blocked shareholder initiatives to address risks related to climate change, racial inequity, and lack of respect for labor rights while rubber stamping executive pay packages and other management proposals.
“Voting with management 99.9 percent of the time is not passive,” said Renta. “It is the same exercise of control as voting any other way and can dangerously interfere with other shareholders’ efforts to press banks to address important risks.”
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