Labor Union Threatens To Support Progressive Challenger
To Key Democrat Over CEO Pay
June 11, 2011
The nation's largest labor union on Friday threatened
to challenge the powerful chairman of the Senate
Banking Committee in the 2014 elections, if he allows a
key set of new executive pay regulations be weakened.
The surprising remark occurred during a panel
discussion moderated by The Huffington Post at the
Social Investment Forum Conference. The summit was
attended by hundreds of socially conscious investors
ranging from religious groups like the Unitarian Church
to high-profile investment houses like Mesirow
During the panel, a top technocrat on the Banking
Committee, General Counsel Dean Shahinian warned that
investors may have to accept a weaker-than-anticipated
version of new disclosures on CEO pay mandated by last
year's Wall Street reform bill. Shahinian also
acknowledged that his boss, committee chairman Sen. Tim
Johnson (D-S.D.), would be willing to re-open last
year's landmark legislation and rewrite some aspects of
the law if bipartisan political consensus about some
measures could be established.
AFL-CIO Special Policy Counsel Damon Silvers
immediately interrupted Shahinian: "I think Senator
Johnson needs to think about his political future," he
said. The audience of potential campaign contributors
let out an audible gasp.
Shahinian responded that Silvers' comment was
"inappropriate" for the panel, but the union lawyer did
Instead, he instructed Shahinian to consider "the
recent personal history of Blanche Lincoln." The AFL-
CIO is widely credited with ruining any chance the
former Democratic senator from Arkansas had of win
reelection in 2008. Walmart, the world's largest
retailer is headquartered in Lincoln's state, and the
labor union had repeatedly objected to her positions on
key workers' rights issues.
Unable to win over Lincoln, the AFL-CIO spent millions
of dollars supporting progressive Democratic challenger
Bill Halter in the 2008 primaries. Halter lost the
primary, but the divided Democratic base caused Lincoln
to suffer a landslide loss in the general election.
At the Friday panel, Silvers vowed to provide the same
treatment to Johnson - one of the most Wall Street-
friendly Democrats in the Senate - if he does not make
sure that Dodd-Frank remains intact.
Johnson is not well-loved by consumer advocacy groups
in Washington, who worry that his close ties to the
banking industry would make it difficult for Democrats
to back financial protections for households. About
one-fifth of all Johnson's campaign cash from 2003 to
2008 came from the financial, insurance and real estate
industries, according to the Center for Responsive
Politics. And Johnson's state is home to the "South
Dakota loophole," which lets credit cards and other
lenders evade state regulations. Eight of the 12 major
pay-day lenders, according to a letter Johnson wrote to
the Federal Deposit Insurance Corporation, are also
"I like Dean, but what he said was just stupid,"
Silvers told HuffPost after the event.
Before his position on Johnson's committee, Shahinian
worked under former Banking Committee Chair Chris Dodd
(D-Conn.) during last year's financial reform debate.
Earlier in the panel, Silvers made a special point of
acknowledging Shahinian's work on the Dodd-Frank bill,
noting that many Washington insiders frequently refer
to the bill as "Dodd-Frank-Shahinian."
The heated exchange was prompted by a discussion of the
ratio of executive pay to that of other workers. As a
result of the law, companies will have to directly
compare the compensation of top officers with the
median salary of its employees.
But executives are now pressuring the Securities and
Exchange Commission to exclude various classes of
workers from the required calculation, in an effort to
make the ratio between CEO pay and rank-and-file
laborer wages appear lower. Shahinian suggested that
some categories of workers, including part-time
workers, may not reflect a fair reading of the bill.
Silvers rejected that view, noting that investors can't
select which of a company's operations to buy into, but
must invest in "the whole company." He further stated
that the AFL-CIO will not accept any move to re-
legislate the issues signed into law by Dodd-Frank for
any reason. Other financial reform advocates have
previously expressed concern that Wall Street interests
will pressure lawmakers to reopen the bill over
relatively minor issues, and use that as a wedge to
defang critical reforms.
Shahinian later hedged his previous phrasing, saying
that Johnson does not personally support altering Dodd-
Silvers' open threat to back a primary challenger
against Johnson comes on the heels of a May speech by
AFL-CIO President Richard Trumka, who cautioned that
Democrats could not take the support of organized labor
for granted in the 2012 elections.
"We will spend the summer holding elected leaders in
Congress as well as the states accountable on one
measure: Are they improving or degrading life for
working families?" Trumka said. "Our role is not to
build the power of a political party or a candidate. It
is to improve the lives of working families and
strengthen our country."
While the AFL-CIO has vocally backed many of the Obama
administration's top legislative initiatives, including
the health care reform bill and the Wall Street
overhaul, the president has not fought aggressively for
labor's top priority, the Employee Free Choice Act.
That bill would make it easier for workers to organize
into labor unions. After repeatedly pledging support
for EFCA during the 2008 campaign, Obama has not gone
to the mat for the bill since entering office, critics
say. Indeed, the legislation has not yet received a
congressional vote under the president's watch, despite
having Democratic control of both chambers for his
first two years in office.
Organized labor's influence within the Democratic Party
has deteriorated significantly since the 1970s, but
unions continue to provide an enormous amount of on-
the-ground campaign support and get-out-the-vote help
for the Party during elections, serving a role akin to
that of conservative churches in the Republican Party.
If labor chooses to sit out races or openly oppose
votes on key candidates, the electoral prospects of
those Democrats will be significantly diminished.
The labor movement has been strengthened of late by
high-profile public opposition to the policies of
Republican Gov. Scott Walker in Wisconsin. Protests to
defending state workers have sparked a series of
efforts to recall Republican members of the state
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