In case you missed it, former Congressman Carlos Curbelo (R-FL) and Tim Doyle of Centerline Liberties penned an op-ed for Real Clear Markets highlighting a recent shift towards politically driven regulations targeting the financial sector. The authors warn that such moves have been putting undue burdens on banks and asset managers, ultimately weakening them and making them more dependent on government decisions which hurts consumers.
Curbelo and Doyle open their piece by detailing how America’s financial sector has been the envy of the world for its ability to deliver products and services for consumers through competitive, free market practices. The authors divulge into recent environmental, social and governance (ESG) trends that are spreading like contagion around many states and pressuring banks, “As these laws become more prevalent, banks and asset managers are increasingly affected by policymakers’ shifting priorities on corporate practices. This rising regulatory burden fosters dependence on government decisions and can push major players out of key markets, weakening competitive forces.”
Additionally, the authors proceed to call out the anti-ESG measures some states are implementing, saying the states will “‘blacklist’ financial institutions from doing business with public entities – including pension and retirement funds – if they are deemed to ‘boycott’ fossil fuels, despite the fact that most of these same financial institutions are also being targeted by environmentalist groups for being among the top financiers of the fossil fuel industry.”
Curbelo and Doyle remark how these retaliatory anti-ESG initiatives are inherently counterproductive and will end up hurting consumers, saying “These types of laws can undermine the competitive nature of financial markets, potentially driving up costs and limiting investment opportunities. Two separate studies found that the implementation of these anti-ESG laws has led to increased costs and reduced competition in both Texas and Oklahoma, with financial repercussions extending to higher interest rates and significant costs for compliance.”
Invasive ESG laws and their reactionary countermeasures ultimately pin consumers against their wallets with either strict red tape or fewer banking options. Curbelo and Doyle say that these states are “…. distorting financial markets and undermining the principles of fiduciary responsibility that govern prudent investment practices. Whether through divestment or requirements for detailed disclosures, such regulations often complicate the financial decision-making process and directly hit taxpayers’ wallets.”
Curbelo and Doyle offer a solution to ease the flaring tensions of the silent war at hand by saying “The path forward should involve a more nuanced understanding of how ESG factors impact financial decisions and a concerted effort to avoid legislation that imposes rigid or overly politicized constraints.” In conclusion, the authors finish by saying “Whether big-government intervention in the free market comes from the Left or the Right, businesses, consumers and taxpayers stand to lose.”
To read the full op-ed in Real Clear Markets, click here.
###
