SEC should be watchdogging Wall Street, not imposing climate-change reporting rules on publicly traded companies
There are perhaps few words as politically charged as “climate change.” Taken at face value, the words simply mean that the climate of the earth changes over time. This is observably the case with seasonal changes, but also over greater spans of time. We were taught in school about the Ice Age, and our scientists believe there were multiple ice ages. Obviously, there are long-term fluctuations in the climate or there would have been one continuous ice age.
In Washington, however, climate change means something different. It’s a political agenda with its supporters lobbying on behalf of special interest groups to set policies that include more unnecessary red tape for American businesses, higher taxes, fees and other actions that have stifled competition and hindered job creation.
Just look at the workforce participation rate, it’s at a 40-year low. This economy is not growing like it should. Climate change is publicly acknowledged as a core agenda for the Obama Administration. And it’s everywhere, occupying the time and taxpayer resources of federal agencies – even those you might least expect.
This Administration directed our military and intelligence agencies to evaluate climate change. How they have the resources to do this when ISIS is on the march and Russia and China are flexing their muscles on the world stage is beyond me.
The Department of Veterans Affairs, mired in scandals denying care to those who served, prioritized costly installation of solar panels in its facilities while claiming it needed more resources to serve veterans, costing taxpayers over $400 million. At NASA, space exploration programs face stiff competition for funding from the climate change agenda even though we have many other agencies specifically tasked with studying the environment, but only one charged with space exploration.
The Securities and Exchange Commission (SEC) also has aligned with the climate change agenda. The SEC was established to protect investors, facilitate capital formation, and ensuring fair, efficient, and orderly markets. Staying focused on this mission is critical.
For more than a decade, the SEC ignored overwhelming evidence that now convicted investor Bernie Madoff was running history’s largest ponzi scheme – approximately $65 billion. It’s still unclear as to why the SEC didn’t move years earlier to investigate Madoff after having all of the evidence handed to them by investigator Harry Markopolos. It wasn’t until everything came crashing down that Madoff was turned in, charged and convicted despite evidence that private investors were suspicious as early as 1991 of Madoff’s methods.
For 12 years, the SEC failed to seriously investigate the Stanford ponzi scheme, which grew from approximately $500 million in investments in 1997 to $7.2 billion in 2009. In 2010, the SEC Inspector General revealed the SEC was aware as early as 1997 that Stanford investors’ funds were in jeopardy of being stolen. It was not until 2004 – seven years after the SEC first became aware of the problems at Stanford – that an official investigation was opened. By the time the SEC took action, it was too late for the Stanford victims, they lost everything.
In 2010, the SEC decided to move forward with requiring guidance for climate change on disclosures filed with the commission. Whatever one’s views on climate change may be, the complicated and interdisciplinary subject of climate change hardly falls under the commission’s areas of expertise.
SEC attorneys and investigators specialized in complex financial products and markets would be tasked with vetting risks affiliated with climate change. Outside Washington the word “guidance” may sound innocuous, but experience shows that regulatory guidance can have the same force of law in shaping behavior.
Furthermore, implementing the SEC’s guidance on climate change is far from straightforward. The future is uncertain in any field, but imagine attempting to put in writing any prognosis on the effects of climate change on your industry or business on a long-term time horizon. Now attempt to do this knowing Washington bureaucrats will review your statements and people may take action against you if they don’t like what you report. This requirement is highly speculative and offers little concrete information to investors.
To inject some common sense into this situation, the House passed my Amendment to stop the SEC from implementing this disclosure requirement. Companies remain free to voluntarily disclose any information concerning weather or climate that they see fit to share with investors. The issue here is keeping the SEC focused on its core mission of protecting investors and to stop the SEC from emerging as a political cudgel in the ongoing climate change debate.
U.S. Rep. Bill Posey, R-Rockledge, represents House District 8, which includes Brevard and Indian River counties.