News Release

First-of-its-kind “Refrain From Political Spending” Resolution to Be Voted on at Bank of America Shareholder Meeting Wednesday

Resolution would ask B of A to opt out of the unlimited, often secret spending ability afforded to it by the Supreme Court in Citizens United case
For Immediate Release

First-of-its-kind “Refrain From Political Spending” Resolution to Be Voted on at Bank of America Shareholder Meeting Wednesday

Resolution would ask B of A to opt out of the unlimited, often secret spending ability afforded to it by the Supreme Court in Citizens United case

On Wednesday, May 9, shareholders at Bank of America will vote “yea” or “nay” on a first-of-its-kind “refrain from political spending” resolution. Resolutions addressing political spending are among the most popular in the 2012 shareholder season, many of them dealing with disclosure of such spending. This groundbreaking resolution was introduced by socially responsible investment firms Trillium Asset Management at Bank of America and 3M Corporation, and by Green Century Capital Management at Target Corporation.

“With this resolution, we are bidding to take back democracy from corporate special interests. Bank of America is the archetype of the reckless corporation, and we do not want them or any other corporate interest having unlimited power in our democracy,” said Janet Domenitz, Executive Director of MASSPIRG, a good government group which, in conjunction with the Corporate Reform Coalition, has been organizing citizens and shareholder groups in support of the resolution.

The resolution requests that the board of directors refrain from using corporate treasury funds to influence the political process. This would include contributions to Super PACs, political non-profits such as the American Legislative Exchange Council (ALEC) -- of which Bank of America is a known member-- and trade associations, such as the Chamber of Commerce. The resolution would not affect lobbying expenditures, separate segregated fund (PAC) spending, or the ability of employees to participate in the political process.

In 2010, the Supreme Court ruled in Citizens United vs. the FEC that corporations have the right to contribute unlimited sums of money to influence an election, opening the floodgates for corporate political spending which the “refrain” resolution seeks to address. Since that decision, outside spending in elections increased from $3.4 million in 2006 to $58.4 million in 2010 and from $25 million in 2008 to $121.1 million so far in 2012.[1]

In Massachusetts, Senator Jamie Eldridge introduced a bill this session that would require a corporation engaging in political activity to file a written report to its shareholders, among other reforms. Unfortunately that bill was issued a study order in March, which typically means the bill goes nowhere during the session.

“With its reputation and stock price at historic lows, any mucking around in politics only creates more risks for B of A’s shareholders. Corporate political spending is dangerous for shareholders and dangerous for democracy. If our courts and elected officials will not do it, then we will rein in the corporations we own ourselves, starting with Bank of America,” concluded Domenitz.

Recent studies have shown that political spending can have a negative impact on a corporation’s bottom line. An April 25 study from the University of Kansas and the University of Minnesota found a decline of 7.4 basis points in risk-adjusted stock return for every $10,000 in political donations and found a relationship between high political spending and poor corporate governance.[2]

In addition, political contributions by Target Corporation and 3M became the subject of outrage and boycotts in 2010, leading to brand and reputation damage that many shareholder groups view as a threat to their investment.[3]

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MASSPIRG is a not-for-profit, nonpartisan citizen-funded organization that advocates for the public interest. MASSPIRG.org

The Corporate Reform Coalition represents a diverse set of reform groups, researchers, and investors working together to advance disclose and accountability of corporate political spending. Corporatereformcoalition.org

 

 

[1] Center for Responsive Politics, http://www.opensecrets.org/outsidespending/index.php

[2] “Corporate political donations do not boost stock performance, KU professor says.” April 25, 2012. http://phys.org/news/2012-04-corporate-political-donations-boost-stock.html

[3] “Protestors to target 3M political contributions.” May 4, 2012. http://www.reuters.com/article/2012/05/04/us-3m-meeting-idUSBRE8431FM201...

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