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Republican Senators Are Holding Up TSP Board Nominees Over Abandoned I Fund Changes
Three Republican senators have demanded that Thrift Savings Plan board nominees never shift the I Fund’s investments to track a more comprehensive market index that includes Chinese investments.
Three GOP senators this month announced that they had placed a hold on President Biden’s nominees to serve on the board of the agency that administers the federal government’s 401(k)-style retirement savings program until they promise not to allow federal employees’ retirement funds to be invested in Chinese corporations.
Leona Bridges, Stacie Olivares, Dana Bilyeu and Michael Gerber all have been recommended favorably by a Senate committee for confirmation to the Federal Retirement Thrift Investment Board, which administers the Thrift Savings Plan, while Javier Saade, Biden’s pick to chair the board, did not advance due to a party-line tie vote, where Republicans objected to past social media posts he made denigrating GOP leaders. Senate Majority Leader Chuck Schumer is expected to discharge Saade’s nomination so that it may receive a final vote.
Sens. Marco Rubio, R-Fla., Tom Cotton, R-Ark., and Tommy Tuberville, R-Ala., have all placed holds on the four nominees who have already advanced out of committee. In a letter to the four nominees, the lawmakers demanded a “commitment” that they not revisit a controversial proposal to change the index upon which the TSP’s international (I) fund is based from the MSCI Europe, Australasia and Far East Index to the more comprehensive MSCI All Country World ex-U.S. Investable Market Index, which includes investments in Chinese firms.
“We are deeply concerned by the Federal Retirement Thrift Investment Board’s history of voting to invest federal employees’ retirement savings into China-based companies, including firms involved in the Chinese government’s military, espionage, human rights abuses and aggressive industrial policy designed to undermine U.S. industry,” they wrote. “The FRTIB’s previous actions have demonstrated a willingness to invest American retirement savings into Chinese companies working to undermine U.S. interests and national security, as well as exposing federal employees’ retirement savings to considerable risk. This cannot be allowed in the future.”
In May 2020, following pressure from congressional Republicans and the Trump administration, the TSP board voted to postpone implementation of a 2017 decision to shift the I Fund to the more comprehensive investment index. Despite that vote, members of the board stressed that the original decision was a fiduciary one, as well as one to comply with the statute creating the TSP, which describes the I Fund as a “reasonably complete representation of the international equity market.”
If the federal government thinks American investments in Chinese funds could harm investors and national security, the Treasury Department’s Office of Foreign Assets Control should step in and bar all Americans from investing in those firms, the members argued in 2020.
Last month, TSP spokeswoman Kim Weaver told Government Executive that any consideration of a new index for the I Fund remains on hold indefinitely, in response to questions regarding whether any TSP funds were invested in Russian corporations following that country’s invasion of Ukraine (they aren’t).
Although the MSCI All Country World Ex-U.S. Investable Market Index also would have exposed federal employees and retirees to investments in Russia, the lawmakers made no mention of Russia in their letter to the nominees. But Tuberville asked current TSP officials about the issue in a separate letter last month.
Unless the senators collectively lift their hold on the nominees, Schumer would have to take additional steps to bring their nominations to the floor for confirmation votes, taking upwards of a week of “floor time” to clear the additional logistical hurdles.