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Gretchen Morgenson's Strange Argument For Proxy Access

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We spent so much time yesterday talking about Ben Stein that we never got around to Gret-Gret’s Sunday essay decrying the SEC’s recent proxy access decision. Which is a shame because it was pretty loopy too.
Morgenson begins with the contention is that the recent losses by publicly held financial companies are the result of director incompetence. “In recent months, owners of many financial stocks have lost billions because the directors who represent them were clueless about risky mortgage operations or toxic loans held by their companies,” she writes.
That’s at least plausible. There are lots of dope and time servers on corporate boards. It’s certainly not obvious, however. We’re not sure that any board of directors, regardless of its composition, would have or could have prevented any of our largest financial institutions from getting caught up in the follies of the credit boom. But let’s grant her this point for the sake of argument.
It’s the next part where she completely loses us. “With so few capable directors who hold themselves accountable to owners at public companies, is it any wonder that pension investors are turning to alternatives like private equity? Those managers act like owners,” she writes.
This is quite a strange point to make in a column arguing for greater shareholder democracy. Those private equity firms—even the publicly traded ones—even less open to investor control than most public companies. It’s almost like some hidden, subconscious and highly intelligent corner of Gret-Gret’s mind smuggled in this paragraph to undermine the rest of her argument.
S.E.C. Sends Investors to the Children’s Table [New York Times]