Randy Barber expects to see "significant changes" in regulating employee stock ownership plans. ESOPs may even get pulled from ERISA, he contends.
"The ESOP provision shouldn't have been in ERISA," said Mr. Barber, director of the Center for Economic Organizing, Washington, and co-author of "The North Will Rise Again."
"ESOPs aren't pension funds. They are investment mechanisms," Mr. Barber said. "They have been used as a tax dodge, an anti-takeover device, any kind of mechanism other than an employee benefit."
Although Assistant Secretary of Labor Olena Berg could not predict when or if the ESOP provision would get pulled from ERISA, she did say it was an issue worth exploring.
"With ESOPs you have two very good public policies coming right up against each other," Ms. Berg said. "One is to encourage people to be productive by tying their fortunes to the company, but the other is to make sure that they secure their retirement income by diversifying their portfolio.
"So, if the solution to this conflict were to be the removal of ESOPs from the ERISA framework, depending on how it is done, I don't think that's a bad thing."
Separately, Mr. Barber said he does not expect a change in the law, but he does expect to see a change in the way institutional investors look at economically targeted investments.
The Department of Labor is expected to sponsor an ETI clearinghouse by the end of this year. Institutional investors will be able to see how ETIs, both good and bad, have been structured.
"The importance of the clearinghouse is that there have been no way to do rigorous comparisons, not just among options, but techniques," Mr. Barber said. "The argument has gotten down to the mechanics. (Institutional investors are saying) 'you have to show us how to do it.'"