Faulty Logic That Fails Shareholders
Letter to the Editor

Sir, Your editorial, "A much needed shareholder victory" (May 22), is based on a fundamental mistake. The people the Securities and Exchange Commission and you want to empower are often not "shareholders" at all. They are mere agents, not principals: the hired managers of pension funds, mutual funds, or other investment vehicles, over whom the real owners have little or no control.

Note the SEC's logical inconsistency: it wants to stop brokers from voting proxies, because they are agents, not stockholders; but then it wants to give these other agents special privileges in proxies.

All agents have agency problems. The SEC's and the FT's notions would have more substance if they were limited to individuals who actually own the shares personally and thus may truly be called shareholders.

Alex J. Pollock is a resident fellow at AEI.

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About the Author

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

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