Schwab Shuts Down PAC, Blames ‘Hyperpartisan Environment’ and Mistreatment
“It is unfortunate that our efforts to advocate for investors are now being purposefully misrepresented by voices on both sides of the aisle as something they are not,” the company said in a long statement Wednesday.
The Charles Schwab Corporation is shutting down the political action committee for its employees in response to the current “hyperpartisan” political environment and its own perceived mistreatment.
The enormous brokerage — which is also the largest RIA custodian, an asset manager, and quietly one of America’s biggest banks — announced Jan. 10 that the Charles Schwab Corporation Political Action Committee, a PAC voluntarily funded by employees of the financial services firm, would not make contributions to any lawmakers for the remainder of the year.
Other financial services companies, including Goldman Sachs, JPMorgan, and BlackRock made similar announcements after rioters encouraged by President Donald Trump broke into the Capitol and disrupted Congress’ certification of the presidential vote.
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Schwab confirmed in an email to RIA Intel Jan. 11 that in addition to the pause on donations, employees would not be able to contribute to the PAC in 2021. But the company did not answer specific questions about any changes to the PAC under consideration, including whether it might continue the PAC at all.
In a statement Wednesday evening, the company announced it was discontinuing the PAC and the remaining funds would be split between the Boys & Girls Club of America and Historically Black Colleges and Universities.
“In light of a divided political climate and an increase in attacks on those participating in the political process, we believe a clear and apolitical position is in the best interest of our clients, employees, stockholders and the communities in which we operate,” the company said in the statement.
The company called itself a champion for Main Street investors and said it has long believed in advocating for an “appropriate regulatory landscape” for them. The PAC has begun to inhibit that mission, according to the company.
“But in today’s hyperpartisan environment, it is becoming more difficult to stay true to our long-standing commitment to bipartisanship while fulfilling our role of advocate and educator. And navigating this complex environment runs the risk of distracting us from what we do best – serving our clients. Serving clients has always been the most productive way for us to advance the interests of the investing public and contribute to the long-term success of the nation.”
The company itself does not make political contributions. The PAC was the only way Schwab made donations, which it divided equally among Democrats and Republicans every year. It did not contribute to individual presidential candidates.
Although it will not contribute politically through its PAC, the company said it is confident its voice will still be heard in Washington D.C.
Schwab also expressed frustration with what the company described as mistreatment by Democrat and Republican supporters. The two parties have been exceptionally divided during the Trump presidency, although many in the House of Representatives came together to impeach the president for the second time on Wednesday.
“It is unfortunate that our efforts to advocate for investors are now being purposefully misrepresented by voices on both sides of the aisle as something they are not. It is a sad byproduct of the current political climate that some now resort to using questionable tactics and misleading claims to attack companies like ours.”
Schwab did not specifically mention any person or organization attacking the company.
Some investors took to social media and pointed out that Charles “Chuck” Schwab, who founded the namesake company in 1971 and is the current chairman, has personally donated millions of dollars to Republican lawmakers, candidates, and organizations in recent years.
“The company is only talking about their corporate PAC here, which is by far the smaller problem. We’re not fooled, @CharlesSchwab,” one woman wrote on Twitter.
The company defended its employees and said the beliefs and actions of the company do represent it.
“We also believe it is unfair to knowingly blur the lines between the actions of a publicly held corporation and those of individuals who work or have worked for the company. Every individual in our firm has a right to their own, individual political beliefs and we respect that right. Their beliefs or contributions do not represent the position of the firm as a whole. We will vigorously defend ourselves against these kinds of misleading attacks, through legal or other avenues as appropriate.”
Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.