(RepublicanReport.org) – The Biden Administration is trying to slip through a major change to 401(k) investment rules. The White House wants to let fund managers prioritize political goals above investment returns, a move that could devastate retirement savings for millions of Americans. Now congressional Republicans are trying to stop the rule — and it looks like they have the numbers.
— The Washington Times (@WashTimes) March 1, 2023
Last November, the Labor Department issued a “clarification” of the rules that govern investment of 401(k) retirement savings. Up until now, fund managers have had a legal obligation to act “solely in the interests” of the owners of those savings — in other words, they’ve been required to get the best possible return on the investments they control.
The new rules change that; they allow managers to prioritize environmental, social, and governmental (ESG) factors above making money for their investors. The Labor Department is quite clear about what this means; the “clarification” says fund managers “may reasonably conclude that climate-related factors… can be relevant,” and the same goes for other factors like diversity, inclusion, and labor relations.
On February 28, Senate Minority Leader Mitch McConnell (R-KY) tore into the rule change on the Senate floor, saying it would give liberals “financial muscle” built on the savings of ordinary Americans who are relying on their 401(k)s to support them in retirement.
The White House claims the rule isn’t a mandate to prioritize ESG, but the original rule was put in place for a good reason — 401(k) funds exist to build retirement savings, not bankroll political causes. Now, House Republicans are moving ahead with a Congressional Review Act, which will now head to the Senate for ratification. This can’t be filibustered and only needs a simple majority to pass. All 49 GOP senators are backing it, and so is Senator Joe Manchin (D-WV).
Of course, Biden can still veto the resolution and let the rule change go ahead, but former President Donald Trump has already said that if he wins in 2024, he’ll ban ESG investments. The GOP is determined to protect Americans’ retirement plans.
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