The Biden administration is doing its level best to encourage America’s giant banks to embrace leftist politics and the political allocation of credit. But today the chieftains of finance received a few timely reminders that endorsing reckless presidential commentary—and denying credit to productive industries merely because they offend liberal pieties—isn’t beneficial to companies or customers.
Last month, President Joe Biden was among those making false and irresponsible claims about Georgia’s voting reforms, and airing outrageous comparisons to the racist laws of the Jim Crow era. A number of corporate CEOs were fooled or bullied into joining the condemnations of the Peach State. With the passage of time, it seems that at least some CEOs have realized how unfair the campaign against Georgia was.
Today the Journal’s Andrew Ackerman and Orla McCaffrey report on a Senate hearing featuring the CEOs of Wall Street’s six largest firms:
Some of the questions Wednesday generated an awkward silence. Sen. Tim Scott (R., S.C.) pressed the executives to explain why some of their firms criticized new voting restrictions in Georgia. Asked what specific portions of the law they found discriminatory, none of the executives chimed in.
Voting process is of course just one issue where CEOs are under intense pressure to go for woke. Banking committee ranking member Sen. Pat Toomey (R., Pa.) urged the Wall Street honchos to resist and instead focus on serving the shareholders they are supposed to represent. His statement deserves to be quoted at length:
The financial system’s contributions to America’s economic growth—before and during the pandemic—are part of the larger success story of capitalism. No economic system has lifted more people out of poverty, created more opportunity, and produced a higher standard of living than democratic capitalism.
Thanks to capitalism, life is better for the vast majority of Americans today than it’s ever been. In fact, before COVID, we had the best economy of my lifetime—as measured by the very metrics that my Democratic friends say are important…
That’s why I’ve been surprised and troubled to see some banks taking actions that undermine the property rights at the heart of our system and politicize lending. Some bank leaders have embraced so-called “stakeholder capitalism”—which diminishes the primacy of shareholders in our economy and enables corporations to pursue a liberal social agenda…
The people who own a company—through shares in their retirement accounts, pensions, college savings accounts, or otherwise—rely on a firm’s officers to look out for their financial interests.
Making decisions based on social policy objectives—rather than profit maximization—deprives these shareholders of their rightful property. Worse yet, once the shareholders’ rights are reduced to the level of all other stakeholders, how does a company’s management decide whose interest to prioritize?
… It is a fallacy to think that if you are seeking profits, you are not serving people. In fact it’s the exact opposite. Business can only profit when they satisfy customers and that can only be achieved with a satisfied workforce and good relationships with the community.
Meanwhile at Axios, Lachlan Markay reports on an effort to resist a particular set of significant demands Team Biden is placing on the financial system: