Protecting Prudent Investment of Retirement Savings Act

Floor Speech

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Mr. HUIZENGA. Mr. Speaker, I appreciate my colleague from Michigan granting me a little time here. I was not planning on speaking on this. I am actually down here for an amendment, but let me clean it up.

Mr. Speaker, the hot garbage that we are hearing right now from the other side prompts me to address this. I am vice chair of the Financial Services Committee. One of our speakers earlier serves on that committee where we regularly cross swords philosophically about what the role of ESG is. Environmental, social, and governance has been a hot topic, Mr. Speaker. I can tell you that.

When he is trying to compare what we are talking about today, regarding what we are dealing with with some of the other retirement plans and publicly traded companies and what the SEC has been doing, we are not talking apples and oranges. We are talking apples and pinecones. They might both grow on trees, but they are not anything like what the reality is.

He is talking about being a CEO. One of our colleagues was talking about being a CEO of a wind company. Mr. Speaker, that is, by definition, one of those ESG companies. When he is talking about pecuniary questions not being allowed to be asked, that is completely false. Materiality is the watchword.

What we saw under the last administration, by the way, is they blew through that legal definition which was from 1976. Thurgood Marshall is the one who developed the materiality definition by law.

They blew through that and said: Do you know what, these issues are so important to us that we are going to just set the law aside and say: No, you must have an environmental or social or governance lens with which to drive this through.

That has nothing to do with return. It has nothing to do with return. What we have seen is that the activist investors who have gotten involved, who have driven these, who have put these shareholder proposals in place and have put these requests in place, don't care about return. That isn't their goal. Their goal is social change.

What we have seen, Mr. Speaker, is over the years we have seen time and time again the cudgel of government and the cudgel of regulators being used to pound business and investment into what they think is the right place. What it has done is actually cheated those who are dependent upon the return, whether it is a firefighter or a teacher.

By the way, in CalPERS, they have actually extracted themselves from a number of these ESG programs and portfolios.

Why is that?

It is because they were having lawsuits from their own members demanding more return and less concern.

What I would just say is that the Financial Services Committee put together an ESG work group that I had the pleasure of chairing, and we came up with a report.

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Mr. HUIZENGA. I will wrap this up.

Mr. Speaker, what that report identified was that what we are seeing is materiality. By the way, material issues are legally required to be disclosed for a publicly traded company or for any of these investment folks. So nobody is trying to hide things. In fact, they are legally required to disclose any of those material issues that may affect stock price.

What we are seeing here is that the gentleman from Illinois and others have argued that all questions regarding the environment or social issues are somehow material.

Mr. Speaker, it simply isn't true. We have to put the investor--that retiree, that person who is desperate for returns so that they can retire--first, not second, behind social issues that bureaucrats have decided is the primary goal.

This amendment requires the Government Accountability Office, the GAO, to submit a report to Congress comparing brokerage window investments in the context of defined contribution plans.

The GAO report will compare investment returns generated through participant-controlled brokerage windows and similar arrangements with the investment returns generated by investments selected and monitored by plan fiduciaries.

What does that mean in plain English? It means basically, do you want to be involved in the decisions surrounding your investments?

Most defined contribution plans, like 401(k) plans allow participants to direct their investments from a menu of options selected by investment fiduciaries, who are the experts. Those are the professionals who have a legal obligation to maximize return for the investor.

Plan fiduciaries go through an extensive selection and monitoring process, evaluating fees, risks, performance, and how each option compares to available alternatives.

If the plan fiduciary places pooled asset funds, like mutual funds, on the investment menu, the fees are almost always lower, which bolsters the fund's net return, meaning more money in the pockets of the investor.

Brokerage window participants are bypassing the investments selected by the plan's investment fiduciaries and self-selecting investments for their retirement savings.

Again, Mr. Speaker, this is about whether you want to be involved in your own retirement savings decisions. I do, by the way.

If the participant purchases a mutual fund through a brokerage window, the participant would likely be subject to the highest retail share class fee for that mutual fund. This amendment calls for the GAO to study whether the net returns generated through brokerage windows are comparable to those generated by the investments selected by plan fiduciaries.

We have had, Mr. Speaker, quite a discussion about ESG and the overarching bill. The point that I had been trying to make earlier was that materiality and return should be the watchword. It is the legal requirement, by the way, but we have seen a warping of government and the regulations surrounding it to try to pound these investments into a social circle that some, not all of us, believe is the right direction to go.

Here is what I want to do, Mr. Speaker. I want to maximize return for that firefighter, that teacher, that police officer. I want to make sure that those who traditionally have not had choice in how they are going to invest their retirement savings get some selection in that through approved funds, through fiduciary responsibilities of professionals. This is the right thing to do and the right direction to go.

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Mr. HUIZENGA. Mr. Speaker, I will close with this. I appreciate where the gentleman is coming from. This has been a long debate regarding some of these issues surrounding what I believe is the core issue. I believe the core issue, Mr. Speaker, is that it is time for us to put retirees first, not second, in investment decisions.

The gentleman was talking about it in ESG funds. I have no problem with the existence of an ESG fund. If someone, for whatever personal reason, decides that they want to invest in a fund that does not have holdings in oil or in pharmaceuticals or something along those lines, that is quite all right, but, Mr. Speaker, it has to be voluntary. It has to be voluntary.

It is okay to invest in that ESG fund, but it is not okay, Mr. Speaker, to force someone into that ESG fund who is then going to suffer for that decision because of a lack of return.

The gentleman cited one study, and I am actually familiar with the study. I can show you five studies for every one that is opposed to this notion that ESG funds are more expensive and have a lower return. At the end of the day, it needs to be about choice for those retirees and their opportunity.

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