New York, NY

Today, a task force from the Interfaith Center on Corporate Responsibility (ICCR) meets with representatives from the Federal Reserve to discuss its progress implementing regulation passed as part of the Dodd-Frank Bill last July. At issue are structures created by the Operations Management Group to monitor the global trading of derivatives in an effort to limit the excessive risk-taking that nearly toppled the financial system in 2008, left millions jobless and homeless, and shook global confidence in the markets to its core.

On Thursday, the same group will appear as shareholders at Citigroup’s AGM looking for investor support for their proxy resolutions. The Citigroup AGM will be the first in a series of shareholder meetings that includes members of the “too big to fail” banks that received billions in government bailout funds.

In October of 2010, the ICCR team released a white paper titled Faith and Finance: Finding Common Ground to Protect the Common Good which laid out the steps they believed were necessary for financial reform to be successful. The group stressed that “an open, transparent and well-regulated global financial system is vital to serve all stakeholders, especially the world’s poor.”

Fr. Seamus Finn of the Missionary Oblates of Mary Immaculate said: As people of faith we are concerned with how market instability impedes the free flow of capital putting millions of lives in jeopardy. As investors we understand that a combination of regulation from outside and inside these financial institutions is required to secure the system and restore the public’s confidence.

Sr. Barbara Aires of the Sisters of Charity of St. Elizabeth said: It’s not difficult to understand why things have to change: When there are no jobs, homes are being improperly foreclosed and now, state and local budgets are in crisis, it’s clear the system is broken. Citigroup management has an obligation to its shareholders to fix what is broken.”

ICCR members have been engaging the banks since the 1970s on a range of practices including predatory lending, modifications of housing loans, executive compensation and lobbying. At last year’s Citigroup meeting, their proposal requesting greater transparency around derivatives trading received an unprecedented 30% of the vote by shareholders, paving the way for even higher votes at Goldman Sachs, Bank of America and J.P. Morgan Chase.

“As the market recovers and bank CEO compensation returns to its breathtaking levels, we need to keep these issues front and center with bank management, government regulators and other investor groups until meaningful reform happen,” said Laura Berry, Executive Director of ICCR.

Finn said, “As Citigroup’s is the first shareholder meeting this proxy season, we want to send a strong message to bank management that we hope other investors will also hear: Share your strategies to reduce operational risk and make affordable capital available to everyone . Only then will the public’s confidence in the financial system be restored.”

For more information please contact:

Susana McDermott

Director of Communications, ICCR

212-870-2938

smcdermott@iccr.org

About the Interfaith Center on Corporate Responsibility

Currently celebrating its 40th year, ICCR is the pioneer coalition of active shareholders who view the management of their investments as a catalyst for change. Its 300 member organizations with over $100 billion in AUM have an enduring record of corporate engagement that has demonstrated influence on policies promoting justice and sustainability in the world.

The Missionary Oblates of Mary Immaculate was among the initial signatories of the declaration, alongside groups like Trillium Asset Management and Wealth for the Common Good. The signatories together represent $20 billion in combined assets under management.

The statement notes that “approximately $100 billion in tax revenue leaves developing economies each year due to trade-related price manipulation by corporations,” and goes on to assert that “one of the first responsibilities of business to society is to pay its fair share of taxes.” One of the problems is that “…aggressive and ‘creative’ global tax strategies have become commonplace among multinational corporations, resulting in significant tax losses to both developed and developing countries. Some of these strategies involve violations of local law.”

The statement asserts that “current financial reporting requirements allow companies to hide these practices from investors and governments” and that signatories “strongly urge the G8, G20, WTO, the European Union and other international fora, as well as national governments, world leaders, faith groups, civil society organizations and corporations to recognize the linkage between corporate financial transparency, good corporate governance, social justice and stable market.”

The Rev. Seamus Finn, OMI, who represented the Oblates at the Yale meeting which developed the statement, said, “In a globally integrated financial system, corporations are being granted numerous opportunities and mechanisms to escape completing their financial responsibilities to local and sovereign jurisdictions. At a time when governments around the world are finding it more and more difficult to raise the revenues they need to provide basic services to their citizens and communities, the gaps and loopholes that facilitate secrecy and make accountability to local communities optional must corrected.”

The Oblates also were signatories to a December 21st letter to the European Commission’s Consultation on Financial Reporting on a Country-by-Country Basis by Multinational Companies, in which the group asked “the European Commission to require country-by-country reporting within the annual audited financial statements of all multinational corporations listed on a stock exchange.”

Click here to read the full New Haven Declaration on Corporate Financial Transparency.

Organizations wishing to add their names to the Declaration, can do so by visiting http://newhaven.gfip.org

Click here to download a PDF of the December 21st letter to the European Commission.

Learn more – visit the Global Financial Integrity website

Theodore Dwight Woolsey and Dwight Hall, Yale University

On December 7th and 8th The Global Financial Integrity Project convened a conference entitled “Socially Responsible Investing and Corporate Financial Reporting: The Need for Transparency” at Yale University. Fr. Seamus Finn from the OMI JPIC office participated and presented a paper on the work of the office in promoting greater transparency by corporations on tax and tariff payments made in different jurisdictions. His paper also discussed the efforts of faith communities to ensure that the US Congress adopts greater transparency standards for the financial industry.

Read the Fall 2010 JPIC Report (Download PDF)

Watch the video:

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Watch the video on the Daily Show website

Senator Russ Feingold (D-WI) sponsored the Congo Conflict Mineral amendment (SA 3997) which was attached to the financial regulatory reform bill. The Congo amendment was originally known as the Congo Conflict Minerals Act of 2009 (S.891). The amendment will require companies to disclose to the Securities and Exchange Commission annually if the minerals in their products originated or may have originated in Democratic Republic of Congo or a neighboring country. Some of these minerals are key ingredients in laptop computers, mobile telephones and products such as video recorders. Companies would also report on their due diligence in determining the source and chain of custody to ensure activities involving such minerals did not finance or benefit armed groups.

Another amendment which was not included in final financial reform bill but was offered during debate in the Senate is the Energy Security Through Transparency amendment (SA 3732) sponsored by Senators Ben Cardin (D-MD), Dick Lugar (R-IN), Chuck Schumer (D-NY) and Roger Wicker (R-MS). There is a new push by advocates to try to get this important amendment, which was included in the House bill, to be conferenced into the final legislation. The amendment is drawn from the Energy Security Through Transparency Act of 2009 (S.1700). It targets companies listed on U.S. stock exchanges to disclose  their extractive payments to foreign governments for oil, gas and mining in  their regular SEC filings. This builds on the Extractive Industries Transparency Initiative (EITI) requirement that all extractive companies operating in an EITI implementing country must report their payments to the government. It also would make the U.S. an implementing country for the EITI, an international protocol that sets a global standard for transparency in oil, gas and mining.

These two amendments are important to millions of poor people in developing nations. Resource-rich countries are home to more than two-thirds of the world’s poorest people and have seen horrific acts of violence committed by those seeking to exploit those natural resources. Corruption and greed have oppressed thousands. If passed into law, these amendments would help shareholders and the concerned public hold corporations accountable for the important minerals they use from the Congo and foster greater transparency within the  extractives industry.

Reconciliation of the two bills in the Conference committee will be underway soon. Due to the impact of these two amendments on certain stakeholders, negotiations are expected to be fierce, with strong pressure exerted by affected industries. Yet, the transparency called for in the legislation has the potential to decrease the violence afflicting the eastern Congo. It is vitally important that these amendments are included in the final version of the legislation.

In the second major 2010 shareholder vote urging more derivatives disclosure, a much higher-than-expected 39 percent of Bank of America (BofA) shares were cast today in support of a resolution sponsored by faith-based institutional investors belonging to the 300-member Interfaith Center on Corporate Responsibility (ICCR). The BofA shareholder vote took place as Congress debates the fate of financial regulatory reform, including increased derivatives disclosure.

The Bank of America shareholder vote improves on a 30 percent support level for the same proxy resolution at Citigroup on April 20, 2010. The ICCR member-sponsored resolution gave Bank of America shareholders an opportunity, as it did at Citigroup, to express their concerns about the lack of transparency in the derivatives market that contributed significantly to the financial crisis.

Subsequent shareholder votes on the derivatives disclosure resolution are set for Goldman Sachs (May 7), and JP Morgan Chase (May 18). Taken together, the resolution targets are four of the five U.S. financial institutions accounting for a reported 96 percent of all derivatives trading in the U.S. The resolutions mark the first time that the banks will face a vote by shareholders on a call to explain their policy on how collateral is secured for the derivatives they use and what their policy is about using their customers’ funds for other speculative activities. (JP Morgan Chase faced a derivatives-related measure with a different focus in 2004.)

ICCR Board Member Rev. Seamus Finn, director, Justice, Peace & Integrity of Creation, Missionary Oblates of Mary Immaculate said: “With major votes in support at both Bank of America and Citigroup, we now have considerable momentum for change. These votes send a strong message to Wall Street that the ‘old ways’ on derivatives and all of the irresponsible risk taking that they introduced into the financial markets is no longer acceptable. In fact, the Bank of America vote may be the most telling among the four votes on our resolution, given the role that irresponsible handling of collateralized debt obligations (CDOs) played in bringing Merrill Lynch to the point that it was sold at fire-sale prices to Bank of America.”

Sr. Barbara Aires, coordinator, Corporate Responsibility, Sisters of Charity of St. Elizabeth, NJ., said: “We consider today’s double-digit vote at Bank of America in favor of the resolution to be a moral victory that tells Wall Street that the obligation to make full disclosure – which is the cornerstone of our open markets – does not suddenly go out the window when it comes to derivatives. Shareholders are saying in a clear voice that it is not acceptable to have one set of rules for the largest market players allowing them to jeopardize not just other market players, but the health of the entire financial system itself.”

Edward Gerardo, director, Community and Social Investments, Bon Secours Health System, Inc., said: “We believe that a big lesson from the financial crisis is that transparency is critical to lowering risk in the marketplace. Having a fair and just financial system that works for all people is both a moral and business imperative. We believe the request for transparency and disclosure in our proposal is an essential element for a fair and just financial system. Clearly, many Bank of America shareholders agree.”

ICCR Executive Director Laura Berry said: “The momentum building behind these resolutions sends a clear message to Americans about the urgent need for reform that recognizes financial security as a basic human right. Over the last 10 years, ICCR members have been ahead of the curve in pressing for greater transparency and responsibility in derivatives trading. While the debate continues on Capitol Hill on legislation that imposes reform from the outside, with this vote, Bank of America shareholders demonstrate how real reform that results in better outcomes for all Americans can happen from the inside.”

ABOUT THE DERIVATIVES RESOLUTION

The ICCR proxy resolution notes that “the recent financial crisis has resulted in the destruction of trillions of dollars of wealth and untold suffering and hardship across the world” and that “taxpayers in the United States have been forced to extend hundreds of billions of dollars in assistance and guarantees to financial institutions and corporations over the past 18 months.”

The resolution also points out that the “very high degrees of leverage in derivatives transactions contributed to the timing and severity of the financial crisis” and that “concerns have arisen about the practice of rehypothecation: the ability of derivatives dealers to redeploy cash collateral that gets posted by one of its trading partners” and that “the financial system was brought to the brink of collapse by the absence of a system and structure to monitor counterparty risk … (while) numerous experts and the U.S. Treasury Department have called for the appropriate capitalization and collateralization of derivative transactions.”

The resolution asks “that the Board of Directors report to shareholders (at reasonable cost and omitting proprietary information) by December 1, 2010, the firm’s policy concerning the use of initial and variance margin (collateral) on all over the counter derivatives trades and its procedures to ensure that the collateral is maintained in segregated accounts and is not rehypothecated.”

Filers of the resolution at the Bank of America are: Missionary Oblates of Mary Immaculate, Rev. Seamus Finn; Sisters of St. Francis of Philadelphia, Sr. Nora Nash; Sisters of Charity of St. Elizabeth, NJ, Sr. Barbara Aires; Sisters of St. Dominic of Caldwell, NJ, Sr. Patricia Daly, OP; Maryknoll Sisters, Cathy Rowan ; Maryknoll Fathers and Brothers, Rev. Joseph P. LaMar, M.M.; Benedictine Sisters of Mount St. Scholastica, Rose Marie Stallbaumer, OSB; and Monasterio Pan de Vida, Rose Marie Stallbaumer, OSB.

The full text of the Bank of America resolution is available online at http://www.onlineethicalinvestor.org/eidb/wc.dll?eidbproc~reso~8849

ABOUT ICCR

For nearly 40 years the Interfaith Center on Corporate Responsibility (ICCR) has been a leader of the corporate social responsibility movement. ICCR’s membership is an association of 300 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues. For more information, visit http://www.iccr.org.

CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com

EDITOR’S NOTE: A streaming audio replay of the ICCR news event held on April 20, 2010 in the wake of the Citigroup vote is available on the Web at http://www.hastingsgroupmedia.com/ICCR/042010shareholderderivativesevent.mp3

With a much higher-than-expected 30 percent of Citigroup shares voted on April 20th in favor of more disclosure of derivatives practices, the focus now shifts to Bank of America (BofA), where shareholders will vote Wednesday (April 28th) on the same resolution sponsored by faith-based institutional investors belonging to the 300-member Interfaith Center on Corporate Responsibility (ICCR). The BofA vote will take place as Congress debates the fate of financial regulatory reform, including increased derivatives disclosure.

The resolution gives shareholders an opportunity, as they did at Citigroup, to express their concerns about the lack of transparency in the derivatives market that contributed significantly to the financial crisis. The higher-than-expected vote from Citigroup shareholders resulted even though the United States government, which controls 27 percent of Citigroup as a result of the bank bailouts, failed to fully support the resolution.

With the Citigroup vote concluded and the Bank of America shareholder balloting taking place Wednesday, subsequent shareholder votes on the derivatives disclosure resolution are set for Goldman Sachs (May 7), and JP Morgan Chase (May 18). Taken together, the resolution targets are four of the five U.S. financial institutions accounting for a reported 96 percent of all derivatives trading in the U.S. The resolutions mark the first time that the banks will face a vote by shareholders on a call to explain their policy on how collateral is secured for the derivatives they use and what their policy is about using their customers’ funds for other speculative activities. (JP Morgan Chase faced a derivatives-related measure with a different focus in 2004.)

Looking forward to the Wednesday annual meeting proxy vote at Bank of America, resolution filer and ICCR Board Member Rev. Seamus Finn, director, Justice, Peace & Integrity of Creation, Missionary Oblates of Mary Immaculate said: “We believe that we have considerable momentum working in our favor now that 30 percent of Citigroup shares were cast in favor of the resolution now pending at Bank of America. These votes send a strong message to Wall Street that the ‘old ways’ on derivatives and all of the attendant market-crashing risk they involve is no longer acceptable. In fact, the Bank of America annual meeting may be the most telling among the four votes on this resolution, given the role that irresponsible handling of collateralized debt obligations (CDOs) played in bringing down Merrill Lynch to the point that it was sold at fire-sale prices to Bank of America.”

Also available for comment will be:

• On site at the Bank of America annual meeting — Edward Gerardo, director, Community and Social Investments, Bon Secours Health System, Inc.; and
• Available by phone — Sr. Barbara Aires, coordinator, Corporate Responsibility, Sisters of Charity of St. Elizabeth, NJ.

ABOUT THE DERIVATIVES RESOLUTION

The ICCR proxy resolution notes that “the recent financial crisis has resulted in the destruction of trillions of dollars of wealth and untold suffering and hardship across the world” and that “taxpayers in the United States have been forced to extend hundreds of billions of dollars in assistance and guarantees to financial institutions and corporations over the past 18 months.”

The resolution also points out that the “very high degrees of leverage in derivatives transactions contributed to the timing and severity of the financial crisis” and that “concerns have arisen about the practice of rehypothecation: the ability of derivatives dealers to redeploy cash collateral that gets posted by one of its trading partners” and that “the financial system was brought to the brink of collapse by the absence of a system and structure to monitor counterparty risk … (while) numerous experts and the U.S. Treasury Department have called for the appropriate capitalization and collateralization of derivative transactions.”

The resolution asks “that the Board of Directors report to shareholders (at reasonable cost and omitting proprietary information) by December 1, 2010, the firm’s policy concerning the use of initial and variance margin (collateral) on all over the counter derivatives trades and its procedures to ensure that the collateral is maintained in segregated accounts and is not rehypothecated.”

Filers of the resolution at the Bank of America are: Missionary Oblates of Mary Immaculate, Rev. Seamus Finn; Sisters of St. Francis of Philadelphia, Sr. Nora Nash; Sisters of Charity of St. Elizabeth, NJ, Sr. Barbara Aires; Sisters of St. Dominic of Caldwell, NJ, Sr. Patricia Daly, OP; Maryknoll Sisters, Cathy Rowan ; Maryknoll Fathers and Brothers, Rev. Joseph P. LaMar, M.M.; Benedictine Sisters of Mount St. Scholastica, Rose Marie Stallbaumer, OSB; and Monasterio Pan de Vida, Rose Marie Stallbaumer, OSB.

The full text of the Citigroup resolution is available online at http://www.onlineethicalinvestor.org/eidb/wc.dll?eidbproc~reso~8849

ABOUT ICCR

For nearly 40 years the Interfaith Center on Corporate Responsibility (ICCR) has been a leader of the corporate social responsibility movement. ICCR’s membership is an association of 300 faith-based institutional investors, including national denominations, religious communities, pension funds, foundations, hospital corporations, economic development funds, asset management companies, colleges, and unions. Each year ICCR-member religious institutional investors sponsor over 200 shareholder resolutions on major social and environmental issues. For more information, visit http://www.iccr.org

CONTACT: Patrick Mitchell, (703) 276-3266 or pmitchell@hastingsgroup.com

A streaming audio replay of the post-vote Citigroup news event held on April 20, 2010 by ICCR members is available on the Web at http://www.iccr.org/news/press_releases/2010/pr_derivatives042010.php

The Missionary Oblates signed a letter generated by the Commodity Markets Oversight Coalition, an informal alliance of industry groups, consumer advocates and academics, representing commodity producers, processors, distributors, retailers, and residential, commercial and industrial end-users. The signatories believe that policy in the commodity trading markets should aim to strengthen oversight, transparency and stability, and to address inadequacies in the existing derivatives markets, both regulated and over-the-counter. As faith-based shareholders, the Missionary Oblates have been pressing for better management of derivatives in discussions with the financial services sector for a number of years.

Read the letter… (Download PDF)

Read Wallis’ blog on his interview with Elizabeth Warren…