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Blog Post | August 9, 2021

Biden Picks Fintech Speculator And Morgan Stanley Alum For Federal Pensions Board

2020 Election/TransitionClimateFintech
Biden Picks Fintech Speculator And Morgan Stanley Alum For Federal Pensions Board

This is an ongoing project and will be updated as the Revolving Door Project gains more information. Please contact Dorothy Slater, slater@therevolvingdoorproject.org, with any questions or additions.

President Biden has repeatedly declared himself “the most pro-union President you’ve ever seen.” But a pro-labor President should also support the workers for whom he’s the boss — namely, the federal civil service.

Retirement security and pensions are about as bread-and-butter as labor issues get. So when Biden announced four new nominees to the Federal Retirement Thrift Investment Board (FRTIB) this Wednesday, which is the panel that decides on investments for the civil service’s pension fund, we took it as a signal of how seriously he’s taking his obligations to his own employees.

It’s also a signal of how seriously he’s taking the most existential crisis he faces — our warming planet. As Dorothy Slater has written, FRTIB nominations aren’t just a labor issue, they’re an enormous opportunity to divert nearly $800 billion in direct federal investment away from carbon-intensive industries and toward responsible green ones. We should hope that a President who signed an executive order on greening the financial system would respond appropriately to the IPCC’s dire new report and put his government’s literal money where his mouth is.

The actual names we’ve gotten, however, are a mixed bag. First, it’s odd that Biden nominated four people when he could have named five — four of the seats on the FRTIB were expired and one was vacant. And the negative names in that bag appear far from worker- and climate-focused. In a few cases, Biden appears to be rewarding well-connected speculative investors, especially those interested in the fintech industry, with access to the federal government’s money pot. While some nominees appear to have workers and the planet’s interests at heart, they may have to fend off those looking to use civil servants’ nest eggs as more fuel for their speculative investment engines. Here are the latest nominees to FRTIB.

Javier Saade

Javier Saade comes from investment firm Fenway Summer, a “hybrid investment and advisory firm focused on innovation.” In other words, the firm invests in fintech companies, most of which are just digital-first versions of traditional consumer credit products, then lobbies Washington not to regulate their “innovative” startups. Saade also owns an investment firm called Impact Master Holdings, which doesn’t list its portfolio but claims to “like working with inclusive companies” in finance, tech, entertainment, and all of their overlaps.

Saade is currently on the board of SVF Investment Corp. The “SVF” there is short for SoftBank Vision Fund, the largest tech-focused venture capital fund on earth which underwrites plenty of fintechs itself. SVF Investment Corp itself, however, is purely a legal fiction, a company which produces nothing — because it’s a special purpose acquisition company (SPAC), a firm which raises money and promises to buy a private company (presumably one owned by SoftBank) down the road. It’s an elaborate end-run around the disclosures and legal due diligence required by the initial public offering (IPO) process, and represents SoftBank learning exactly the wrong lessons from the catastrophic IPO failure of its darling WeWork

Saade is also presently on the board of Porch, which connects homeowners with home improvement contractors, and is chairman of GP Funding Inc, about which scant information exists online, but which is according to Saade, “a Rothschild and Presidio-owned financial services company.”

Through Fenway Summer, Saade is invested in a range of digital-first versions of traditional consumer finance products, including several credit cards, several private student loans, a credit improvement consultancy, a notary service, and a cryptocurrency platform. But Saade is also a senior advisor to Fenway Summer’s sister firm FS Ventures, a “strategic advisory firm” (translation: lobbying shop) employed by many heavy-hitters in the fintech industry. FS Vector takes credit for the idea of asking the Office of the Comptroller of the Currency to create “special purpose national bank charters” for fintechs — a special designation which would grant fintechs all of the advantages of being a federally chartered bank, with none of the downsides.

Saade’s colleague at FS Vector, Amy Friend, was briefly in the running to head the Office of the Comptroller of the Currency, a regulator which could issue many handouts to the fintech industry. Friend has revolved in and out of OCC for years, and is on the board of the comically industry-funded think tank, the Alliance for Innovative Regulation. The industry cheered the candidacy of Michael Barr for that job, but he was ultimately nixed. FRTIB may not be a financial regulator, but it does control a huge pot of money that could be helpful investment fuel for Fenway Summer’s portfolio firms. 

As Paul Volcker once noted about a previous generation of financial “innovators,” “I wish somebody would give me some shred of evidence linking financial innovation with a benefit to the economy.” All too often financial innovation is a complex way to market off old-fashioned grifts. A financial “innovator” like Saade is not the type of person to be trusted with public employees’ hard-earned money. 

Stacey Olivares

Stacey Olivares refers to herself online as an “experienced C-suite executive,” which may be an effective term to nail a corporate job interview, but should lead to rolled eyes and questioned motives from all the rest of us. 

Olivares is presently the “insurance industry representative” on CalPERS, the California Public Employees’ Retirement System Board. CalPERS is the largest public pension in the country, overseeing roughly $447 billion. She also currently serves on the board of a SPAC—also known as a “blank check company” or a shell corporation, the risks of which have been well-documented—called Mission Advancement Corps, and on the board of the Kroll Bond Rating Agency. Kroll was charged $2 million by the Securities and Exchange Commission in September of 2020 for faulty rating practices. 

Olivares, with unfortunate timing, joined Morgan Stanley in July of 2008 as a portfolio manager and financial advisor. She also previously served as Managing Director and Chief Investment Officer of the California Organized Investment Network (COIN), a government investment fund for increasing insurance investment in rural and underserved parts of California, and as Chief Investment Officer of Lendistry, a fintech lender focused on small businesses. Max Moran and Timi Iwayemi previously documented the many potential risks and real harms of the fintech industry here.

Olivares’ career does not inspire confidence, and neither does her apparent lack of support for fossil fuel divestment of retirement funds. According to the White House’s announcement of her nomination, she has championed ESG investing with an apparent focus on diversity. But never has she publicly supported fossil fuel divestment. 

CalPERS, though in the traditionally progressive, environmentally-minded state of California, presently has $30 billion invested in fossil fuels, including coal. CalPERS has argued in its defense that divestment conflicts with their fiduciary duty to maximize profit and minimize risk. Putting aside the moral odiousness of framing profit as the singular goal of any enterprise, and especially a government-run one, this claim is, as the Fossil Free California campaign describes, completely false. Fossil fuels are considered a declining industry, and if CalPERS had divested 10 years ago, they could have increased their profits by $11.9 billion. “C-Suite” apparently means little more than C- returns for investors and increased carbon emissions for the planet.

Dana Bilyeu

One of the less troubling nominees on this list is Dana Bilyeu, who is being renominated for a second term. Bilyeu was first nominated by President Obama in 2011. Before going federal, Bilyeu spent 10 years at the Public Employees Retirement System of Nevada. Right now, in addition to her duties on FRTIB, Bilyeu runs the main networking organization for state pension board CEOs, known as the National Association of State Retirement Administrators (NASRA). NASRA does not engage in lobbying or donate to political campaigns — it appears to just be a venue for people in this particular niche to chitchat and share best practices. 

That’s not to say Bilyeu is perfect — we have our objections to her evident focus from her first confirmation hearing on financial literacy as a tool for retirement security, which deflects responsibility onto individual workers rather than the system meant to support them. But arguments like this, over policy, are still miles better than the evident conflicts of interest apparent in the other nominees.

Leona Bridges

Leona Bridges may be the best nominee of this bunch. She was an early supporter of fossil fuel divestment as a Commissioner for the San Francisco Employees’ Retirement System, saying unequivocally that “full divestment is in the best interest of the plan” back in 2015, and previously as a board member of the San Francisco State University Foundation, voting in 2013 to divest their endowment. 

Bridges’ public service experience also includes time as the Director for San Francisco’s Municipal Transportation Agency, as a Commissioner for the city’s Parking Authority, service on the city’s Bond Oversight Committee, and an extended tenure on the California State University System Investment Advisory Committee.

While the start of Bridges’ career was not all rosy—she worked in securities lending at Wells Fargo Investment Advisors, and was a Managing Director at Barclays for over two decades — she’s spent the last two decades firmly working within public pension management. She’s thus well-qualified and independent of direct corporate influence.

Bridges absolutely has room to improve. While she has supported San Francisco’s divestment plans for years, the retirement system remains invested in fossil fuels to this day. As an FRTIB commissioner, Bridges must rise to the occasion and lead to divest the country’s retirement funds, and we look forward to working with an engaged commissioner on the topic. 

What’s Next?

We’re glad to see Biden recognize his responsibility to appoint new members to the FRTIB, but nominating private equity managers, venture capitalists, and fossil fuel-aligned commissioners to the board directly contradicts his public campaign promises to be a labor and climate president. It also stands to harm federal employees, who deserve a champion for the public good, as well as the planet, which desperately needs an end to fossil fuel financing. 

FRTIB nominees require Senate confirmation, but due to their status as “privileged” nominees, they are permitted to skip the committee hearing process unless requested by any Senator. Instead, they are only required to fill out a committee questionnaire before being sent to the full Senate for a floor vote.

We urge any Senator concerned about labor and climate justice issues to request a committee hearing for the above nominees. We cannot afford FRTIB members who are more interested in profit — at any cost — than the wellbeing of federal employees and the planet.

Photo: Montpelier, VT, USA” by 350.org is licensed under CC BY-NC-SA 2.0

2020 Election/TransitionClimateFintech

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