American Business Conference

The Golden State has been sending IOUs to vendors, contractors and others until politicians figure out a way to close its $26.3 billion budget gap.  So far, according to press reports, about $230 million of these warrants have been issued. 

Now comes State Assemblyman Joel Anderson – a Republican – who is sponsoring a bill to allow recipients of the warrants to use those warrants to pay their California income taxes.  Yesterday, the bill was unanimously approved by the Business and Professions Committee and now is heading for the appropriations committee. 

If this bill passes it will put California in the business of printing its own money.  Already, according to a U.S. House budget committee staffer I know, the warrants are trading at a discount on E-bay and Craig’s List (they carry a 3.75% coupon). 

If someone tells you that America isn’t going the way of Argentina, you might want to tell them about Joel Anderson’s excellent idea, one that, if it passes, might well be adopted by other cash-strapped states.

On July 1, the Commissioners of the Securities and Exchange Commission voted 3 – 2 to deny the use of the broker vote in uncontested director elections.  Readers interested in the American Business Conference’s views on this matter can access our comment letter here.

The change to the broker vote was proposed by the NY Stock Exchange (which has some explaining to do to its listed companies) and long supported by union pension funds and the Council for Institutional Investors, which, from a policy standpoint, is strongly influenced by those same pension funds.  Getting rid of the broker vote, an action that will suppress the vote of individual shareholders, who tend as a group to be pro-management, amounts to giving institutions, such as labor pension funds, more power.  Giving labor unions more power, despite their inability to gain members in the private sector themselves, seems to be a theme of public policy lately.

Narrowing the use of the broker vote is just step one.  The next step for the unions is the adoption of a rule permitting access to the proxy.  The American Business Conference will oppose this “reform,” but given that a majority of the Commissioners are already on record in support, it seems like a done deal. 

In summary:  if you run a private company, be glad that you do.