Senator holds up Fed Thrift nominations over China concern

Sen. Marco Rubio, R-Fla., has placed a hold on four nominations to the Federal Retirement Thrift Investment Board, Washington, until the nominees commit to withhold Thrift Savings Plan assets from Chinese companies.

"We are deeply concerned by the Federal Retirement Thrift Investment Board's history of voting to invest federal employees' retirement savings into China-based companies, including firms involved in the Chinese government's military, espionage, human rights abuses and aggressive industrial policy designed to undermine U.S. industry," Mr. Rubio and Sens. Tommy Tuberville, R-Ala., and Tom Cotton, R-Ark., said in an April 5 letter to the four nominees. "The FRTIB's previous actions have demonstrated a willingness to invest American retirement savings into Chinese companies working to undermine U.S. interests and national security, as well as exposing federal employees' retirement savings to considerable risk. This cannot be allowed in the future."

The FRTIB administers the $769.5 billion TSP, the retirement system for 6.5 million federal employees and members of the uniformed services.

In November 2019, the board reaffirmed a 2017 decision to shift the TSP's I Fund benchmark to the MSCI ACWI ex-U.S. Investible Market index from the MSCI EAFE index. The new index was made up of about 8% Chinese companies, according to an Aon Hewitt Investment Consulting study presented to the board in October 2019.

But in May 2020, Trump administration officials sent a letter to then-FRTIB Chairman Michael D. Kennedy urging the board to stop the I Fund index shift. The same week, President Donald Trump nominated three people to the five-member board that, upon Senate confirmation, could have led to a new majority. At a subsequent meeting in May 2020, the board decided to pause the implementation and let the new board members make the final decision.

To date, no new board members have been confirmed. The Trump nominees were never considered by the full Senate, and President Joe Biden pulled their nominations in February 2021. Mr. Biden put forth his own nominees in September and November.

Javier E. Saade, managing partner at Impact Master Holdings and venture partner at Fenway Summer, was nominated as chairman of the FRTIB. He would replace Acting Chairman David A. Jones and serve the remainder of a term expiring this year and another term expiring in October 2026.

Leona Bridges, a commissioner for the $35.3 billion San Francisco City & County Employees' Retirement System, was nominated to a term expiring in October 2023 currently held by William S. Jasien.

Stacie Olivares, a trustee of the $466 billion California Public Employees' Retirement System, Sacramento, and board member of the Mission Advancement Corp. and the Kroll Bond Rating Agency, was selected to fill a term expiring in September 2024, replacing Ronald McCray.

Dana K. Bilyeu, executive director of the National Association of State Retirement Administrators, was renominated for a third term, expiring in October 2023.

Michael F. Gerber, a partner and executive committee member at FS Investments, a multistrategy alternative investment firm, and a co-founder and adviser at Intrinsic Capital Partners, a growth equity firm, was nominated to fill a term expiring later this year and a term expiring in September 2026.

The nominees appeared before the Senate Homeland Security and Governmental Affairs Committee in March for a confirmation hearing. The committee on March 30 approved four nominees via voice vote, but split on Mr. Saade's nomination in a 7-7 vote. Committee Republicans opposed his nomination due to previous tweets they deemed offensive and critical of Republicans.

"He exhibited a serious lack of judgment in a series of partisan social media posts," Mr. Portman, R-Ohio, the committee's ranking member, said of Mr. Saade prior to the March 30 vote.

Because Mr. Saade's nomination did not receive majority support in committee, it cannot move forward to the full Senate without Majority Leader Chuck Schumer, D-N.Y., discharging it from committee.

The letter Messers. Rubio, Tuberville and Cotton sent April 5 asks the remaining FRTIB nominees to commit that the TSP's I Fund does not mirror the MSCI ACWI ex-U.S. Investible Market index and to commit to voting that "no federal employee retirement funds go to any Chinese firms that undermine U.S. national security."

The senators await the nominees' "prompt reply," the letter concludes.