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Elizabeth Warren exploits coronavirus crisis to push unrelated corporate reforms

Elizabeth Warren exploits coronavirus crisis to push unrelated corporate reforms

Warren announced eight preconditions, most of them unrelated to the crisis and some permanent, she wants imposed on the airline and other industries receiving federal assistance to survive the government-imposed coronavisus shutdowns.

Rahm Emanuel once said:

You never want a serious crisis to go to waste. And what I mean by that [is] it’s an opportunity to do things that you think you could not before.

Elizabeth Warren is taking that to a new level, proposing to hold saving the airline and other industries hostage to corporate governance changes unrelated to the crisis.

One of Warren’s core campaign plans was the Accountable Capitalism Act, which would impose sweeping changes on corporate America.

The reforms, published in August 2019 when Warren was rising in the presidential polls, were explained by Warren in a Wall Street Journal Op-Ed:

The Accountable Capitalism Act restores the idea that giant American corporations should look out for American interests. Corporations with more than $1 billion in annual revenue would be required to get a federal corporate charter. The new charter requires corporate directors to consider the interests of all major corporate stakeholders—not only shareholders—in company decisions. Shareholders could sue if they believed directors weren’t fulfilling those obligations….

My bill also would give workers a stronger voice in corporate decision-making at large companies. Employees would elect at least 40% of directors. At least 75% of directors and shareholders would need to approve before a corporation could make any political expenditures. To address self-serving financial incentives in corporate management, directors and officers would not be allowed to sell company shares within five years of receiving them—or within three years of a company stock buyback.

For the past 30 years we have put the American stamp of approval on giant corporations, even as they have ignored the interests of all but a tiny slice of Americans. We should insist on a new deal.

Warren’s legislative proposal received glowing reviews in liberal media, such as Vox, but Warren stood little chance of federalizing corporations and defeating shareholder rights, even if she became president. With the collapse of Warren’s campaign, the corporate reforms of the Accountable Capitalism Act faded from public view.

But Warren has found a new vehicle to push the corporate reforms: The potential bailout of the airline and airplane manufacturing industries. While no specific details have been announced by the Trump administration and Congress, it appears that there will be sustantial cash infusions and corporate loan guarantees by the federal government to prevent the collapse of these critical industries. The collapse comes not from bad business models, but from restrictions on travel and gathering imposed by federal, state and local governments.

The government has cut off the revenue spigot for these companies in the public health interest, collapsing the normal business cycle. When we come out of this health crisis, these travel industries will rebound, but only if they still exist. So it’s a national priority to make sure the airlines and Boeing don’t go under.

Warren is using this crisis and possible bailout to push her corporate reforms as a precondition to saving the airline industry. She announced eight preconditions that she wants imposed on industry, most unrelated to the current crisis and several imposing permanent structural change:

We’re not writing blank checks to giant corporations. Any taxpayer dollars that go to help big businesses during the coronavirus crisis should come with the following minimum requirements:

1. Companies must maintain their payrolls and use funds to keep people working or on payroll.
2. Companies must provide a $15 minimum wage within one year of the national emergency declaration ending.
3. Companies are permanently prohibited from engaging in share repurchases.
4. Companies are prohibited from paying out dividends or executive bonuses while they are receiving any relief and for three years thereafter.
5. Companies must set aside at least one seat – but potentially two or more, as the amount of relief increases – on the board of directors for representatives elected by workers.
6. Collective bargaining agreements should remain in place and should not be reopened or renegotiated pursuant to this relief program.
7. Corporations must obtain shareholder and board approval for all political expenditures.
8. CEOs must be required to personally certify a company is in compliance and face criminal penalties for false certifications.

Congress must set up an oversight body, modeled on the Congressional Oversight Panel and the SIGTARP program for the bank bailout, but with real funding & subpoena power. We need real accountability to make sure these conditions are met.

In other words, Warren is holding the national interest in saving critical industries from collapse hostage to her corporate reform proposals, most of which are unrelated to the crisis.

Is it any wonder even her home state Democrat voters rejected her in the primaries?


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2smartforlibs | March 18, 2020 at 1:51 pm

Ever wonder what never let a good crisis go to waste means?

notamemberofanyorganizedpolicital | March 18, 2020 at 2:05 pm

Send this to Lizzie Borden-Warren. Hi

Via Twitchy, Harmeet K. Dhillon uncorks a rant for the ages.

1/As a San Francisco resident and business owner, I’m wondering–can I trust the health judgments of leaders who let thousands live on the streets in their filth? And if we are now getting homeless into shelter, why couldn’t that have happened earlier? Doesn�t their health count?
2/ All of a sudden we are supposed to accept 24-hour curfews “for your own safety” from people who order the police to stand down when Antifa & friends beat the hell out of taxpayers; people who refuse to enforce laws they don’t like (death penalty, bail, property crimes) …/

3/ City leaders who literally give wanted alien criminals a public heads up when ICE is about to conduct raids are now telling me what’s best, declaring a death penalty for businesses, no hearings or due process?! Forgive me if I don’t fall right into line with the fascism …/

4/ which seems awfully situational. The Governor’s suggestions yesterday that older and vulnerable people take extra care and stay inside seemed reasonable. Liberal city leaders decided to seize the opportunity and throw the whole economy into a tailspin as collateral damage …/

5/ but don’t worry — we’ll soon have a government sponsored bailout for favored groups soon, funded with a tax increase crammed down the throats of the dwindling number of taxpayers. Homeless go back to the streets, illegal alien criminals get sanctuary, car break-one continue…

6/ Criminals continue to be released from jail or not arrested at all, and we all become more habituated, like sheep, to the loss of liberty yet again, “for our safety.” I’m not buying it. I don’t buy it with FISA renewal, with gun grabbing, or with this sweeping lack of process.

/7 SF Mayor London is tied to a corruption investigation of a federally indicted city bureaucrat she dated. San Jose Mayor Sam Liccardo mocked Trump supporters assaulted by criminals while police stood down. Oakland Mayor Libby Schaff tips off wanted violent illegal aliens … /

/8 …. these are the Bay Area rulers telling 7.1 million+ citizens — more than the population of many US states — to stay indoors, shut down businesses? Great judgment, all of them.

Related: California governor Gavin Newsom, who has let homeless populations breed the literal bubonic plague in their homeless camps, now admits he had the power to “encourage people off the streets” all along.

He just didn’t consider it worth doing.

texansamurai | March 18, 2020 at 2:06 pm

nobody gives a damn what you think, fauxcohontas

Liz Warren-more trash.

Does she realize that there may not be the people in the offices to implement her ideas?

The Friendly Grizzly | March 18, 2020 at 2:20 pm

Lizzzz: do what Hillary said she’d not do. Go bake cookies. If you know how.

A brazen Dhimmi-crat power grab, from one of the most self-serving and narcissistic Dhimmi-crat apparatchiks, around.

This miserable, worthless, and mendacious crone is an insufferable demagogue-scold/nag/shrew/harridan.

The Dhimmis want to destroy the private sector.

I absolutely hate Warren, with a passion. If a two-ton safe fell on her, I wouldn’t shed any years.

How about the Dhimmi-crats pass “The Accountable Government Act?” the private sector is a more responsible, competent and responsive actor than the profligate and bloated federal government ever was, or is, today.

Shareholders could sue if they believed directors weren’t fulfilling those obligations….

“Accountable Capitalism Act”? Sounds more like a “Lawyer’s Relief Act” to me.

Good grief. I pride myself in being an independent, not mindlessly following what positions any particular political party supports. (I used to do lobbying, where it’s very helpful to understand where both sides are coming from.) But things like this make it *really* hard to keep an open mind about the Democrats.

Benito and Adolf are nodding their approval.

Liz, go have a beer and STFU. Shrew alert!

LibraryGryffon | March 18, 2020 at 3:01 pm

I’d like to see her point 7 applied to unions.

Sometimes there are higher priorities …

Baltimore Mayor Begs Residents To Stop Shooting Each Other So Hospital Beds Can Be Used For Coronavirus Patients

MaggotAtBroadAndWall | March 18, 2020 at 3:41 pm

CNBC just reported JPMorgan expects GDP to contract 4% in Q1 and a mind blowing 14% in Q2. During the financial crisis, real GDP was off about 4.3% from peak to trough.

If they are right, there is no amount of stimulus that will prevent a massive wave of layoffs and bankruptcies. Which of course is setting off new jitters in banking and credit markets.

Social unrest unlike anything we’ve seen in modern history seems possible to me if JPMorgan’s forecasts are remotely close to accurate. No wonder gun and ammo sales are soaring. We’re facing an economic catastrophe that will make the financial crisis look rosy be comparison.

    Massinsanity in reply to MaggotAtBroadAndWall. | March 18, 2020 at 8:07 pm

    Barron’s article today suggesting that given the synchronized global impact of the virus and the required steps to stop it we could be looking at a depression rather than a recession. It is difficult to model/predict because there has been only one in modern history.

    The hope is that unlike most severe recessions the cause of this one is well understood and if it can be controlled the snap back could be quick and robust… unless morons like Warren get in the way.

    Katy L. Stamper in reply to MaggotAtBroadAndWall. | March 19, 2020 at 10:07 am

    Personally, I am still working and still going about fairly normal activities. I don’t shake hands and I do keep my distance. But that’s about my only change.

So sick of Big Chief Pimple-Pops-on-Her-Tongue.

There could be room for a middle ground. For instance, airlines, according to Bloomberg news, have spent 96% of net cash on share buybacks increasing the share price. I am sure that many other industries have done the same if not at such a high percentage. So before direct assistance these industries need to explain why they don’t have cash reserves or adequate access to credit markets and limitations/conditions placed upon any funds they request from the federal government. They can always refuse the funds if they believe the conditions too burdensome.

Another example is the hospitality industry. The large hotel chains have the ability for economy of scale cost reduction in their businesses, excess cash flow to create reserves, and access to credit markets along with the ability to float sales of stock to cushion the blow. I have a number of properties that are let for short term rental. Other than maintaining an operating cash reserves of 6 months, I have no practical way to weather this. So where is the bailout for property owners like me? We don’t expect one and are not likely to see one and that is ok. However, this is precisely the sort of situation that the folks demanding bailouts should be forced to confront.

Take the bailouts during the housing bubble. Instead of the federal government providing support to lenders who made irresponsible loans an alternative would have been to simply force a ‘mark to market’ on every residential mortgage coupled with streamlined refinancing.

The large publicly traded corporations who have acted irresponsibly need to pay some price for their folly. As long as we simply send money to industries instead of to individual tax payers we are subsidizing failure. Take a look at SEN Hawley plan as a good start. It takes a bottom up approach which in my opinion is far preferable to a top down approach such as the bailout during the bubble in 2008/09.

Warren is insane. And, she is n utter fool. Corporations should hand over almost half of operational control to individuals who don’t actually own the company? This is absurd. Risk-takers are owners. If you want to exercise corporate control, buy shares and earn a shareholder vote. That’s the capitalist way.

American Human | March 18, 2020 at 4:55 pm

Does no one have a Contingency Plan any more? What ever happened to the old Continuity of Operations Plan?

I guess they still have the “Everything is Awesome” plan though.

John Sullivan | March 18, 2020 at 5:56 pm

Doesn’t Warren realize she dropped out of the race and has no reason to push these idiotic platforms?

Massinsanity | March 18, 2020 at 8:22 pm

I can’t stand Warren and her policies have no place in this proposed bailout but I must sharply disagree with this statement:

“The collapse comes not from bad business models, but from restrictions on travel and gathering imposed by federal, state and local governments.”

This may be true for airlines and is certainly true for many of the suppliers to Boeing and Airbus but Boeing itself is in this position because of gross mismanagement under Dennis Muilenburg who is quite possibly the worst CEO in the history of corporate America and a spineless board that let him run this great company into the ground.

Start with the decision to build a new mid sized commercial jet (737 MAX) using a fuselage that dated back to 1967 which when paired with modern jet engines created issues requiring the introduction on the MCAS software to prevent the airplanes from stalling in a climb.

Then they paired the crap software with a single sensor prone to failure which led to the deaths of over 300 innocent people. Muilenburg had one objective… build planes that don’t crash ad Boeing would be predictably printing money for 20+ years barring some exogenous shock (like a global pandemic). But the company failed miserably.

The topper, in the last 5 years the company spent $35,000,000,000 on share buybacks which is nothing more than financial engineering . Given where the stock is today they basically lit about $28,000,000,000 on fire. Thats some leadership.

The MAX debacle put the company in a position where it couldn’t survive another shock such as a 9/11 type attack or a pandemic.

If (more likely when) this company gets bailed out the taxpayers better take ownership and look to recoup our money in 5-10 years via an IPO.

    randian in reply to Massinsanity. | March 19, 2020 at 5:11 am

    Muilenburg’s decisions were largely driven by regulatory incentives. A 1967 fuselage doesn’t need new and very expensive certifications, nor does reusing sensor configurations and avionics, however unreliable their failure modes may be.

Didn’t she die or something? Or is this her zombie corpse?

Warren’s behavior here matches exactly the behavior of the Chinese Communists who withheld information about the Corona virus for political reasons.

Okay, she is a member of the minority party in the Senate. How does she expect she can even get a hearing on her crazy ideas, let alone get them passed into law?

    Katy L. Stamper in reply to MikeE. | March 19, 2020 at 10:53 am

    Individually, Senators have a lot of power.

    I’m sure she can leverage it to obtain something.

Can you believe people didn’t want her screeching at them for the next 4 years?