June was a busy month for Congressional hearings on various financial issues of importance act to Main Street Americans. Better Markets monitored many of the hearings, submitted suggested questions for consideration, and shared expertise and resources as appropriate. We also provided insight and analysis via social media, letters to appropriate congressional representatives, and fact sheets.
> House of Representatives Passes Package of Bills to Address Climate Change, Give Investors More Information About ESG Impacts
On June 17, the House of Representatives voted 215-214 to pass H.R. 1187, the Corporate Governance Improvement and Investor Protection Act. This legislation is a comprehensive package of five individual bills that collectively improve investor protection by requiring publicly traded companies to be more transparent about their activities.
By requiring that companies provide environmental, social, and governance information about their operations, investors are better able to hold companies to account for their environmental, social and governance (ESG) activities.
H.R. 1187, introduced by Rep. Juan Vargas (CA-51), would establish within the SEC a new Sustainable Finance Advisory Committee that would recommend to SEC staff and commissioners policies and best practices to facilitate the flow of capital to environmentally sustainable investments. It would also require publicly traded companies to disclose specific ESG activities to their shareholders.
Incorporated into the final version of H.R. 1187 that passed the House was legislation by Rep. Bill Foster entitled the Shareholder Political Transparency Act, which requires publicly traded companies to report to the SEC details about their political spending, including so-called ‘dark money’ that groups donate to organizations to avoid public scrutiny.
Additionally, the Greater Accountability in Pay Act, introduced by Rep. Nydia Velazquez would help close the racial and gender pay gap by requiring companies to report more information about compensation for corporate executives.
Finally, two additional bills were included in the package: Rep. Cindy Axne’s Disclosure of Tax Heavens and Offshoring Act, which requires companies to share with regulators information about their use of overseas tax havens, and Rep. Sean Casten’s Climate Risk Disclosure Act, which requires companies to disclose more information about how exposed they are to climate-related risks and how increased climate-related disasters may impact their bottom lines. Public companies currently don’t have to reveal any such information and, as a result, investors aren’t able to properly calculate the impact of climate change on their investments.
This legislation follows recent moves by the SEC to strengthen its disclosure rules about climate-related risks; Better Markets recently filed a comment letter with the SEC asking the regulator to establish a new disclosure framework for climate-related risks that companies face.
Better Markets has long advocated for commonsense SEC rules that require companies to be honest with their investors and disclose comprehensive, accurate, and useful information about their operations. That’s why Better Markets led the fight against the Trump Administration’s attacks on ESG disclosures, and has worked closely with Biden Administration regulators at the SEC and other agencies to ensure that climate disclosures such as those sought by Rep. Casten go hand-in-hand with a broader set of disclosure requirements that cover information about other social and corporate governance issues, including diversity and compensation.
> House Financial Services Committee Considers Legislation Requiring Megabank Disclosures of Important Data
On Wednesday, June 23, 2021, the House Financial Services Committee met to debate legislation that would require the country’s largest banks to disclose new data about their operations.
H.R. 3948, the Greater Supervision in Banking (G-SIB) Act, introduced by Rep. Pressley of Massachusetts, would require U.S. banks that have been designated by the Federal Reserve as “global systemically important bank holding companies” or G-SIBs, to present detailed reports to the Fed each year.
Regulators and the public alike need more information about the operations of the G-SIBs, and Better Markets applauds the House Financial Services Committee and Rep. Pressley for confronting this important issue.
The megabanks would be required to share information about their size, complexity, compensation for bank executives compared to the banks’ average employees, support for Minority Depository Institutions and reach their climate emissions reduction targets and improve the diversity of their boards.
Since they were bailed out by American taxpayers to the tune of trillions of dollars during the 2008 financial crisis, America’s megabanks have only grown larger and more complex. Today, the country’s six largest banks – Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, and Wells Fargo – each have over $1 trillion in assets. And yet, although they play a significant role in the economic livelihood of every American, these banks are not required to publicly disclose information about the impact of their operations on the society in which they operate.
These six megabanks were in the spotlight in May when their CEOs testified before the House Financial Services Committee and the Senate Banking Committee. As usual, Better Markets provided commentary and analysis of the hearings with links to our resources via Twitter @BetterMarkets, as well as in our May newsletter. Additionally, a Better Markets analysis of the operations of these six Wall Street giants details nearly 400 major legal actions taken by federal regulators against them over the past 20+ years.