Biden’s First Veto

[LDAHL]

I’m reading that the President may soon be exercising the first veto of his term. Both Houses of Congress voted to overturn his administrative rule allowing fund managers to depart from their traditional responsibility to act as fiduciaries in order to further environmental, social or governance goals. The fiduciary rule goes back to the seventies, when corporations and unions were misusing pension funds for various purposes not in the best interests of their employees and members.

Under the current rules, managers can direct investment funds for ESG investments rather than the best returns consistent with their allowed level of risk only if that is specifically allowed by the prospectus or other governing documents. Under Biden’s new rule, any managers will be able to pursue their own vision of social justice at the expense of the people they are being paid to serve.

Should Congress be unable to override the veto, I would expect to see various lawsuits, or perhaps major mutual funds offering “non-woke” or “politically incorrect” investment strategies.

[iris lilies]

Oh Lord. Thank you for this good explanation. I’m surprised Congress has the balls to act on this, good for them.

I remember the White House ruling but haven’t followed it. I guess this just points out how carefully one must now interview fiduciaries. Fortunately, I can’t imagine either one of our investment guys pursuing social justice investment opportunities.

[frugal-one]

Not the whole story….

https://www.cnn.com/2023/03/02/politics/biden-veto-gop-woke-capitalism/index.html

The Biden rule, however, does not require investment managers to make such decisions; it merely allows them to do so if they are relevant to risk and return analyses.

[LDAHL]

Not the whole story….

https://www.cnn.com/2023/03/02/politics/biden-veto-gop-woke-capitalism/index.html

The Biden rule, however, does not require investment managers to make such decisions; it merely allows them to do so if they are relevant to risk and return analyses.

Right. They can compromise return for “justice” only if they want to under this rule. Virtue purchased with other people’s money.

[iris lilies]

Not the whole story….

https://www.cnn.com/2023/03/02/politics/biden-veto-gop-woke-capitalism/index.html

The Biden rule, however, does not require investment managers to make such decisions; it merely allows them to do so if they are relevant to risk and return analyses.

would you rather sacrifice a point or two of profit, unbeknownst to you, for being socially responsible? Is that OK with you?

Do you think it’s OK that you or anyone else makes that decision for me?

I do not want to lose thousands of dollars when my fiduciary decides to put that elsewhere. I want to be the one that decides where my charitable dollars go. Please do not take that decision away, it isn't yours to take.

[Teacher Terry]

IL, I am agreeing with you a lot lately:)).

[rosarugosa]

I too am on team IL for this one!

[frugal-one]

Not the whole story….

https://www.cnn.com/2023/03/02/politics/biden-veto-gop-woke-capitalism/index.html

The Biden rule, however, does not require investment managers to make such decisions; it merely allows them to do so if they are relevant to risk and return analyses.


There are regulations now that investment professionals are to work to the benefit of the investor so IL point is moot.

[LDAHL]

I see he’s vetoed the bill. Hopefully some enterprising group will soon be producing some metric of the ESG burden in any given fund. I’m guessing index funds will be relatively safe from managers deciding they can make more money by serving the latest fashion in social justice causes.