There is an interesting proposal in California where legislators are moving to punishing any companies who work with the federal government in the construction of the wall pledged by President Donald Trump between the United States and Mexico. The bill would force pension funds to divest from participating companies. It is a bill that would significantly raise the level of conflict between the Trump Administration and certain states. The Trump Administration is already moving to withdraw grants from cities and states barring assistance to federal immigration officials. To now have states retaliate against companies for simply contracting with the federal government would push the already bad situation to Def Con 1 over federal/state conflict. There is no way that the federal government could sit ideally by as states retaliated against federal contractors.
Assembly Bill 946 would require the California Public Employee Retirement System and the California State Teachers Retirement System to liquidate investments in any company involved with the wall’s construction within a year. It would also require the pension-fund management to report a list of those companies to the Legislature. With assets of f $312 billion and $202 billion, respectively, these are the countries two largest pension funds and could hit some companies hard.
The proposal is being introduced by Assemblyman Phil Ting, D-San Francisco and Lorena Gonzalez Fletcher, D-San Diego, and Eduardo Garcia, D-Coachella.
Notably, these funds have been down recently and such restrictions imposed by politicians could drive down value for the pension funds. This money belongs ultimately to the workers who entrust the assets with an understanding that the funds will be maintained and maximized. If politicians can create lists of barred investments, the pension funds will become extensions of politics rather than funds geared toward the protection of value for employees. More importantly, the move would likely trigger demands for broader denial of federal funds to California.