House panel probes Trump rejecting China stocks on retirement funds
A top House Democrat will investigate whether President Donald Trump and his administration broke the law by pressuring a federal retirement board to reverse plans to begin investing in a new index that includes Chinese companies, according to a letter obtained by POLITICO.
Rep. Gerry Connolly (D-Va.), chairman of the government operations subcommittee on the House Oversight and Reform Committee, sent the letter to Labor Secretary Eugene Scalia on Thursday requesting all documents related to his involvement in the matter.
Connolly referred to a May 13 decision by the Federal Retirement Thrift Investment Board to abandon a plan to invest in the MSCI All Country World ex-U.S. Investable Market Index, which includes Chinese companies subject to U.S. sanctions and export bans.
The decision, which came after pressure from the Trump administration, garnered bipartisan praise from Sens. Marco Rubio (R-Fla.) and Jeanne Shaheen (D-N.H.), who had long opposed the move.
But not so in the House. Connolly said that through the administration's efforts to pressure the retirement board to change the investment plan, “it appears that DOL and the Trump Administration may have violated the bipartisan Federal Employees’ Retirement System Act of 1986, signed into law by President Reagan.”
That law established an independent board as the only legal authority to administer and manage the federal retirement plan, called the Thrift Savings Plan, Connolly said.
The administration should take its concerns about investment in Chinese companies to the Office of Foreign Assets Control at the Treasury Department “instead of circumventing the authority granted only to the statutorily independent board,” Connolly said.
The Department of Labor responded in a statement: “The Federal Retirement Thrift Investment Board acted unanimously and appropriately in indefinitely deferring the Thrift Savings Plan’s investments in risky Chinese companies in accordance with President Trump’s directive and the serious concerns expressed by the National Security Adviser, Assistant to the President for Economic Policy, and the Secretary of Labor. Representative Connolly remains free to invest in any companies of his choosing.”
Rep. Jim Jordan (R-Ohio), the top Republican on the House Oversight Committee, balked at Connolly's letter in a statement later Thursday afternoon: "It’s unconscionable that the Oversight Democrats think it’s wise to continue business as usual with a Communist regime responsible for the loss of hundreds of thousands of lives and that evaded responsibility for starting the pandemic.”
American Securities Association CEO Chris Iacovella disputed Connolly's suggestion that the Trump administration acted illegally.
"The board came to its own decision independently and in accordance with the law," he said after the letter was published Thursday.
The retirement board’s vote to abandon the plan came after Trump personally directed administration officialsto stop the planned changes in investments in two letters on May 11, which Connolly said amounted to “mounting and inappropriate political pressure from DOL and this Administration.”
One letter from National Economic Council Director Larry Kudlow and National Security Adviser Robert O'Brien told Scalia "the Board should cease implementation immediately" on the new investment plan and asked him to update them on the board's intentions by May 15.
Scalia then wrote to the retirement board asking for confirmation by May 13 that it "immediately halt all steps associated with investing" in the index.
“Under your leadership, DOL has overstepped and misused its authority,” Connolly said.
