Government Affairs Update
December 13, 2021
Finance and HELP Committees Releases Updates Build Back Better Text
The Senate Committees on Finance and Health, Education, Labor, and Pensions (HELP) released updated text for their portions of the Build Back Better Act. According to press statements from both Finance Committee Chairman Ron Wyden (D-OR) and HELP Committee Chairwoman Patty Murray (D-WA), the changes reflect both “policy and technical changes, as well as modifications to ensure compliance with Senate budget rules.” The updated Finance Committee text offers companies with pensions special protections from the proposed “book income” minimum tax on large corporations included in the House passed version of the bill. The Senate bill also proposes to ease limitations on corporate interest deductions that the House version included to finance the bill and makes technical corrections to the House passed measure. Senate Democrats are working to address the House passed state and local tax deduction (SALT) provisions.
Any questions should be referred to Paul Richman.
IRI, Congressional Republicans Respond to ESG Proposal
IRI has convened a drafting group to develop comments in response to the Department of Labor’s proposed rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” proposal. We will share IRI’s comments once they have been submitted to the DOL. The Proposed Rule would amend the “Investment Duties” regulation under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, to clarify obligations related to the consideration of environmental, social and governance (ESG) factors by fiduciaries of private sector employee benefit plans as well as the exercise of proxy votes for retirement plans.
Last week, Banking Committee Ranking Member Pat Toomey (R-PA), Finance Committee Ranking Member Mike Crapo (R-ID), HELP Committee Ranking Member Richard Burr (R-NC), and Special Committee on Aging Ranking Member Tim Scott (R-SC) sent a letter to Labor Secretary Martin Walsh expressing their concerns with the Department of Labor’s (DOL) recent proposal to allow plan fiduciaries to utilize environmental, social, and governance (ESG) investments in retirement plans. In the letter, the Ranking Members noted that they believe the new rule “effectively mandates consideration of climate change and ESG factors in all investment and proxy voting decisions. In addition, the proposal vastly expands the circumstances in which retirement plan fiduciaries can pursue ESG causes even when they provide no financial benefits to plan participants and beneficiaries. As a result, it will significantly harm Americans’ retirement savings by allowing plan fiduciaries to promote non-pecuniary policy objectives like lowering global carbon emissions and promoting “social justice” rather than being solely focused on maximizing investment returns.”
Republicans on the House Education and Labor Committee, full committee Chairwoman Virginia Foxx (R-NC) and HELP Subcommittee Chairman Rick Allen (R-GA), sent a similar letter to Secretary Walsh. In their letter, the Representatives said, “we are extremely concerned that the Biden administration is jeopardizing the retirement savings of Americans to ‘steer private capital to implement an agenda they can’t pass through Congress.’ It is incumbent on DOL to ensure its policies and regulatory guidance are consistent with the fundamental tenets of ERISA and the mission of EBSA—to protect the retirement savings of America’s workers and their families… We therefore request that the Department immediately rescind the proposed rule and begin enforcing the existing rules, which prioritize the financial interests of workers and retirees.”
Any questions should be referred to John Jennings or Emily Micale.
Bill Introduced to Allow Retirement Fund Penalty-Free Withdrawals Connected to Natural Disasters
Representatives Mike Thompson (D-CA) and Mike Kelly (R-PA) introduced the Disaster Retirement Savings Act last week. The bill enables survivors of natural disasters to access up to $100,000 from retirement funds without fees or penalties to cover costs such as emergency housing without Congressional action. The amount withdrawn would need to be repaid over a three-year period. In a press statement, Rep. Thompson said, “Survivors of natural disaster deserve to know that the Federal government is working to help them respond and recover from the moment the emergency begins. That’s why I am proud to introduce this important bipartisan legislation that allows people in disaster zones to withdraw funds from their retirement accounts without penalties or fees to cover emergency expenses such as temporary housing.” Representative Kelly also highlighted the importance of not penalizing survivors of disasters and said the bill “will provide the resources and the peace of mind in a moment when they really need it.”
Similar legislation was introduced by Senators Bob Menendez (D-NJ) and Bill Cassidy (R-LA) earlier this year.
House Financial Services Committee Publishes DEI Report Findings
House Financial Services Committee Chairwoman Maxine Waters and Subcommittee on Diversity and Inclusion Chairwoman Joyce Beatty (D-OH) published a report entitled “Diversity and Inclusion: Holding America’s Largest Investment Firms Accountable” last week. The report was produced by the committee to “promote transparency and accountability for diversity performance and encourage economic inclusion” following commitments by financial institutions “to diversify their workforce and implement programs, practices, and policies that aim to increase both racial and gender equity.” The data was compiled from information requested from “investment firms with assets over $400 billion.” Key findings from the report focused on workforce diversity, board diversity, procurement, asset management diversity, and underwriting procurement diversity. The committee’s staff used these findings to develop recommendations for actions Congress can take to improve diversity and inclusion. These include:
- Investment firms should collect disaggregate data regularly on workforce, executive and board diversity, as week as regular audits on pay and racial equity
- Investment firms should partner with historically Black colleges and universities, minority serving institutions and community colleges to build talent pipelines
- Investment firms should consider at least one diverse candidate for all executive positions and board positions during openings
- Investment firms should consider diverse suppliers whenever a procurement takes place, particularly when contracting asset managers
- Investment firms should develop pipeline programs for diverse asset managers to manage larger portfolios.
Any questions should be referred to John Jennings.
LIBOR Bill Passes Out of the House
The House passed H.R. 4616, the Adjustable Interest Rate (LIBOR) Act, last week by a vote of 415 – 9. The bill, introduced by Representative Brad Sherman (D-CA), provides replacement interest rates for loans, securities, and “other financial instruments” for when the London Interbank Offered Rate (LIBOR) interest rate is retired as a benchmark in 2023. In a press statement following passage, Rep. Sherman said, “The passage of this bill represents an instance of Congress proactively moving to fix an impending crisis. Failure to transition away from LIBOR will leave parties unable to calculate the interest due on an estimated $16 trillion of debt instruments, a systemic risk to the economy. [T]his legislation provides a structural bridge, removing uncertainty and reducing systematic disruption in the markets.”
Any questions should be referred to John Jennings.