In the face of bad inflation numbers in April and May — an annualized rate of about 9% — the rich dudes who run the Federal Reserve let us working folk know that they were pretty sure this inflation is “transitory.”
What makes the diffidence of the Fed toward truly destructive inflation in this instance so galling is that keeping prices stable is literally its only job.
Instead of doing that, however, the Fed nowadays spends most of its time making sure that companies toe the party line on climate change and other liberal priorities, especially environmental, social and governance (or ESG) concerns.
The central bank is joined in this by the Securities and Exchange Commission and other Biden administration financial regulators. The SEC has begun pressing companies on whether they have gotten religion on all sorts of things, from climate change to environmental justice to political giving. To stay within the boundaries of its statutory authority, the SEC has to pretend that such considerations are “material” to a company’s financial performance.
For his part, President Biden likes to say that climate change poses an “existential” threat. But he doesn’t really believe that. If he did, he would not routinely jet off to his beach house.
Talk about climate change as an existential threat is nonsense, not believed even by the people who routinely say it in public.
So why the emphasis on climate change and ESG by financial regulators?
Because progressives, having floated away from real religion, have organized themselves around the new religion of environmentalism.
More importantly, large Democratic Party donors, like the crew at the BlackRock investment house, have figured out they can make money on the disproportionate emphasis on climate and ESG regulation in the financial space.
Do you know what is a legitimate, real-world existential threat to the United States? Nuclear warheads atop missiles operated by communist Chinese and aimed at us.
But Team Biden and its donors don’t seem to care about that threat; there is no money in it. Their energy and environmental policy seem specifically designed to make China richer and Americans poorer, to trade our current energy strength for dependence on materials owned or controlled by the communists in China.
As far as the Biden SEC is concerned, American companies must be woke at home but are free to do business with the regime in Beijing built on genocide, torture, slavery and international hooliganism.
Should the Chinese communists be allowed to access the U.S. capital markets to fund a regime that undermines the United States? Of course not.
Yet, registered investment funds in the U.S. that hold Chinese government bonds, or track an index that includes such bonds, transfer savings from America’s investors, workers and retirees directly or indirectly to the Chinese communists, their military, factories that use forced labor, re-education camps, and a cyber-army that relentlessly attacks the U.S.
Instead of aggressively pursuing marginal and irrelevant features of American companies, financial regulators should address the material risks and the ESG challenges posed by the exposure of American investors to the Chinese Communist Party.
Fortunately, Sen. Pat Toomey of Pennsylvania and the Republicans on the Senate Banking Committee are aware of these problems and have been working to bring them to light.
Since February, they have:
- Urged the SEC to reject a proposed rule from Nasdaq that requires companies to adopt new diversity standards for boards of directors;
- Warned against unelected, unaccountable regulators imposing financial regulations that substitute political favoritism for prudential business judgment;
- Encouraged the Department of Labor to enforce two 2020 regulations designed to protect retirement savings by preventing fiduciaries from prioritizing ESG objectives above the financial interests of American workers and retirees;
- Told Biden climate envoy John Kerry to stop pressuring banks about energy loans;
- Sent a letter to the SEC urging it to reject new global warming disclosures; and
- Sent a letter (along with Sen. Ron Johnson of Wisconsin) to the Federal Retirement Thrift Investment Board raising concerns about whether asset managers prioritize liberal policy objectives over federal employees’ retirement savings.
The Republican senators know that we need to make sure the Fed, the SEC and other financial regulators are focused on their statutory responsibilities and not on the political fashions of the day. They know that we need to bring more transparency, visibility and accountability to these regulators – including making the Fed subject to the simplest and most direct form of transparency and accountability – the Freedom of Information Act.
Finally, they know that we need to make sure that the financial regulators care more about American workers, families and retirees than they do about powerful and opaque Democratic Party donors.
• Michael McKenna, a columnist for The Washington Times, is the president of MWR Strategies. He was most recently a deputy assistant to President Trump and deputy director of the Office of Legislative Affairs at the White House.