    [Senate Hearing 117-245]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-245

                   WARRIOR MET AND WALL STREET GREED: WHAT
                    CORPORATE RAIDERS ARE DOING TO WORK-
                    ERS AND CONSUMERS

    =======================================================================

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON THE BUDGET
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               February 17, 2022

                                   __________

               Printed for the use of the Committee on the Budget

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    47-229 PDF                 WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                            COMMITTEE ON THE BUDGET

                       BERNARD SANDERS, Vermont, Chairman
    PATTY MURRAY, Washington             LINDSEY O. GRAHAM, South Carolina
    RON WYDEN, Oregon                    CHARLES E. GRASSLEY, Iowa
    DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
    SHELDON WHITEHOUSE, Rhode Island     PATRICK TOOMEY, Pennsylvania
    MARK R. WARNER, Virginia             RON JOHNSON, Wisconsin
    JEFF MERKLEY, Oregon                 MIKE BRAUN, Indiana
    TIM KAINE, Virginia                  RICK SCOTT, Florida
    CHRIS VAN HOLLEN, Maryland           BEN SASSE, Nebraska
    BEN RAY LUJAN, New Mexico            MITT ROMNEY, Utah
    ALEX PADILLA, California             JOHN KENNEDY, Louisiana
                                         KEVIN CRAMER, North Dakota

                    Warren Gunnels, Majority Staff Director
                      Nick Myers, Minority Staff Director

                                C O N T E N T S

                                  ----------

                          THURSDAY, FEBRUARY 17, 2022

                    OPENING STATEMENTS BY COMMITTEE MEMBERS

                                                                       Page
    Chairman Bernard Sanders.........................................     1
    Senator Mike Braun...............................................     4

                                   WITNESSES

    Statement of the Honorable Elizabeth Warren, U.S. Senator from
      the State of Massachusetts.....................................     6
        Prepared Statement of........................................    34
    Statement of the Honorable Tommy Tuberville, U.S. Senator from
      the State of Alabama...........................................     7
        Prepared Statement of........................................    36
    Statement of Mr. Cecil Roberts, International President, United
      Mine Workers of America........................................     9
        Prepared Statement of........................................    37
        Questions and Answers (Post-Hearing) from:
            Senator Chris Van Hollen.................................   135
    Statement of Mr. Braxton Wright, Mine Employee, Warrior Met Coal,
      UMWA Local 2368................................................    11
        Prepared Statement of........................................   105
        Questions and Answers (Post-Hearing) from:
            Senator Chris Van Hollen.................................   136
    Statement of Dr. Nomi Prins, Economist and Author, Former
      Managing Director, Goldman Sachs...............................    21
        Prepared Statement of........................................   108
        Questions and Answers (Post-Hearing) from:
            Senator Ben Ray Lujan....................................   137
    Statement of Mr. James Kwak, Research Fellow, University of
      Connecticut School of Law......................................    23
        Prepared Statement of........................................   110
        Questions and Answers (Post-Hearing) from:
            Senator Ben Ray Lujan....................................   139
            Senator Chris Van Hollen.................................   141
    Statement of Dr. Douglas Holtz-Eakin, President, American Action
      Forum..........................................................    24
        Prepared Statement of........................................   119
    Statement of Mr. Duncan Wood, PhD, Vice President for Strategy &
      New Initiatives, The Wilson Center.............................    26
        Prepared Statement of........................................   123

    WARRIOR MET AND WALL STREET GREED: WHAT CORPORATE RAIDERS ARE DOING TO
                             WORKERS AND CONSUMERS

                                  ----------

                          THURSDAY, FEBRUARY 17, 2022

                                           U.S. Senate,
                                       Committee on the Budget,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 11:00 a.m., via
    Webex and in Room SH-216, Hart Senate Office Building,
    Honorable Bernard Sanders, Chairman of the Committee,
    presiding.
        Present: Senators Sanders, Warner, Kaine, Van Hollen,
    Padilla, Grassley, Crapo, Toomey, Johnson, Scott, and Braun.
        Staff Present: Warren Gunnels, Majority Staff Director; and
    Nick Myers, Republican Staff Director.

                 OPENING STATEMENT OF CHAIRMAN SANDERS

        Chairman Sanders. Okay. Let us get going. Let me thank
    Senator Braun for serving as Ranking Member today, filling in
    for Ranking Member Graham. Let me also thank our colleagues who
    will be attending this hearing and our witnesses who will be
    with us this morning.
        Today we are going to discuss an issue of enormous
    consequence but which, unfortunately, is not talked about
    enough, not talked about enough here in Congress, not talked
    enough about in the media, and that is the incredible
    concentration of ownership and power that a handful of Wall
    Street investment firms have over our entire economy and the
    enormous impact they have on workers, consumers, and virtually
    every person in our country.
        Today, in America, just three--one, two, three--Wall Street
    firms--BlackRock, Vanguard, and State Street--manage $22
    trillion in assets. Let me repeat that. Three companies manage
    $22 trillion in assets.
        So what does that mean? Well, for starters it means that
    the amount of money these three firms control is nearly equal
    to the entire gross domestic product, the GDP, of the United
    States. Three companies and more than five times the GDP of
    Germany. These three firms--BlackRock, Vanguard, and State
    Street--are major shareholders in more than 96 percent of S&P
    500 companies. In other words, they have significant influence
    over many hundreds of companies that employ millions of
    American workers and, in fact, enormous impact over our entire
    economy.
        Let us talk about banking. We all remember that after the
    Wall Street crash of 2008, there was a whole lot of discussion
    about the wealth and the power of the major banks that were,
    quote/unquote, ``too big to fail.'' You all remember that?
    Well, these three Wall Street investment firms that we are
    talking about today are the largest shareholders of some of the
    biggest banks in America--JPMorgan Chase, Wells Fargo, and
    Citibank. In other words, they have enormous influence over
    enormous banks.
        Let us talk about transportation. These three Wall Street
    firms are among the top owners of all four major airlines--
    American, Southwest, Delta, and United.
        What about health care? Everybody is concerned about health
    care, the cost of health care in America. Together these three
    firms own an average of 20 percent of the major drug companies
    in America. Wall Street firms, in general, have bought up
    thousands of nursing homes. Everybody is concerned about the
    cost of nursing homes. They bought up thousands of nursing
    homes where profits have been soaring at the same time as
    mortality rates have gone up as well.
        These three firms are also responsible for the astronomical
    prices and emergency rooms. Yes, three firms own emergency
    rooms in hospitals all across this country, increasing prices
    by over 60 percent and driving over half a million Americans
    into bankruptcy each year. These three firms.
        These three firms will tell you that they are passive
    investors, that they are not involved in the day-to-day
    decisions of the companies they own. But let us be clear. These
    three companies control nearly one-fourth of votes at
    shareholder meetings, leveraging their power to influence CEO
    compensation, stock buybacks, and environmental commitments,
    mergers, and pension benefits.
        In addition to the big three, a small handful of Wall
    Street vulture funds, so-called private equity firms, also have
    an enormous control over industry after industry after
    industry. Over the past two decades, private equity takeovers
    have slashed nearly 1.3 million jobs and shut down nearly
    20,000 stores in the retail industry, including Toys ``R'' Us,
    Payless, and Dollar General.
        Let us talk about housing. Last year a small number of Wall
    Street firms and other extremely wealthy investors bought about
    1 out of every 7 homes in some of the largest cities in
    America, and now own over 1 million apartments, hiking rents by
    as much as 30 percent and neglecting needed repairs on the
    safety of tenants. Wall Street firms are responsible for the
    astronomical prices in emergency rooms. Yes, these firms own
    emergency rooms in hospitals all across this country,
    increasing prices by over 60 percent and driving over half a
    million Americans into bankruptcy each year. These wall street
    firms.
        And if, interestingly enough, you have not heard much about
    the power of these Wall Street firms, that may have something
    to do with the fact that a small number of Wall Street firms
    control about half of the newspapers in America.
        Now we are talking about a small number of Wall Street
    firms that buy up companies, load them up with debt, and make a
    huge amount of money by laying off workers, slashing wages,
    shipping jobs overseas, and eliminating health care and pension
    benefits. According to recent studies, after these Wall Street
    firms take over companies as a result of leveraged buyouts,
    jobs are slashed by 13 percent, wages fall by 6 percent, and
    the companies that Wall Street firms take over are 10 times
    more likely to declare bankruptcy.
        When we talk about power in America many people think that,
    you know, President of the United States, pretty powerful guy,
    that he is the most powerful person in this country. Well,
    frankly, I am not so sure. Given the enormous power that the
    CEOs of these extremely large Wall Street financial firms have
    over our economy, it may well be that these guys are more
    powerful than the President of the United States.
        And that brings us to where we are today with Warrior Met
    Coal in Brookwood, Alabama, where workers have been engaged in
    a strike for 11 months, fighting for economic justice, fighting
    for dignity on the job. In 2016, a group of private equity
    funds, led by Apollo and Blackstone, acquired Walter Energy and
    formed Warrior Met Coal. As part of the restructuring, workers
    were forced to take a $6 per hour wage cut, over 20 percent of
    their wages, and massive cuts to their health care and
    retirement benefits. The concessions the miners made five years
    ago saved Warrior Met $1.1 billion.
        Let us be clear. The workers agreed to these cuts with the
    understanding that they would be restored when the company
    returned to profitability. That is not what happened. While
    Warrior Met has returned to profitability and could afford to
    pay its CEO, Walter J. Scheller III, $4 million in compensation
    each year, it has reneged on that deal and is offering workers
    an insulting $1.50 raise spread over five years, about a $0.30
    an hour increase over five 5 years, while refusing to restore
    the health care and pension benefits that were taken away from
    them in 2016.
        Now, so everybody should understand this, I invited Mr.
    Scheller, the CEO of Warrior Met, to testify at this hearing.
    He was invited. I wanted to ask him how, over the last five
    years, Warrior Met could afford to provide $1.5 billion in
    stock buybacks and dividends to its wealthy shareholders and
    huge bonuses to its executives but somehow could not afford to
    treat its workers with the dignity and respect they deserve.
        Once again, concessions made by the workers totaled $1.1
    billion over five years. Stock buybacks and dividends over the
    same period totaled $1.5 billion.
        I invited, for this hearing, Larry Fink, the CEO of
    BlackRock and the largest shareholder of Warrior Met to testify
    at this hearing. My hope was, and my hope remains, that Mr.
    Fink will do the right thing and demand that Warrior Met's
    management sit down with their workers and negotiate a contract
    in good faith. Unfortunately, Mr. Fink has declined to testify.
        Further, I invited Stephen Schwarzman and Marc Rowan, the
    CEOs of Blackstone and Apollo, to testify at this hearing as
    well. Unfortunately, all of them declined to participate.
        The good news is, however, that we have a number of
    excellent witnesses who are not afraid to come before the
    public and answer questions. They include Braxton Wright, a
    worker at Warrior Met, and Cecil Roberts, the President of
    United Mine Workers of America (UMWA). Our last panel will
    include several economists who have studied and written
    extensively on this issue.
        Let me just be very clear about this. What is happening at
    Warrior Met is not an aberration. It is not an exception to the
    rule. At a moment of unprecedented corporate greed in this
    country, attacks against working people are taking place in
    company after company, industry after industry.
        And here is a dangerous reality. Never before in the
    history of the United States of America have so few owned so
    much and had so much power over our economy. This extraordinary
    concentration of ownership held by Wall Street over our economy
    is an issue that Congress and the American people must deal
    with.
        And with that let me introduce Senator Braun and recognize
    him for his opening remarks. Senator.

                   OPENING STATEMENT OF SENATOR BRAUN

        Senator Braun. Thank you, Mr. Chairman. I appreciate how
    far witnesses have traveled to come here today to discuss this.
    It is a multi-faceted discussion. This is the Budget Committee.
    And I think the whole issue of concentration in industry--I
    came from Main Street America where we had no help from
    government, and we did not have any of the crony capitalist
    things that occur, largely through this place, that gives a leg
    up to many industries.
        I will cite that in the classic way the economy should work
    you should have full competition, no barriers to entry. You
    should have an engaged and informed consumer. Those are the
    elements that make capitalism and free markets work. Sadly,
    over time, they evolve in a different way. But I will go back
    to my original point. This is the Budget Committee, and I am
    not sure that this is the jurisdiction that we can discuss it.
    Of course, the Chair can discuss whatever he wants to. I think
    there is validity in looking at some of those issues.
        I am going to focus on what I think we should be doing, and
    that is talking about the fact that we have just recently
    eclipsed $30 trillion in debt as a country. The Senator and I
    have had a vibrant discussion on the floor, reaching about 26
    or 27 minutes, 6, 7 months ago. And I know there is a
    difference of opinion there too.
        But when it comes to how any entity works you cannot borrow
    from your kids and grandkids on things that you are consuming,
    as much as we would like to do it, for whatever the benefit is
    that might accrue. It is a bad business plan, it will run into
    the ditch in a hard way, and we will have to reconcile it down
    the road to where currently we ought to be looking at the
    drivers of it, which would be Medicare, Social Security,
    programs everybody would want to be there, and to be in sound
    shape. If we keep plowing ahead now with $1.5 trillion deficits
    baseline, taking us into that next tier of indebtedness, it
    will not be a good ending for all the people that depend on it,
    mostly elderly, for their retirement and their health care.
        What I would like to do is get back to the essence of this
    Committee, which means that we do regular order, discuss these
    things, not talking about spending, a CR vote that we are going
    to have later today, where we are talking about a budget that
    should have been worked on last year, finished with all
    appropriations done by September 30, 2021. That is not running
    the place very well for all the people that depend upon it.
        In this particular dispute with workers and mine, that is
    probably not the domain of the Budget Committee, although I
    understand the relevance of it. It probably should be kept in
    the private sector because it is currently part of a legal
    dispute.
        Look at what the Biden administration did when it got the
    reins. We had 1 percent inflation. We were raising wages in the
    toughest places, the old-fashioned way. We were not making
    government the centerpiece of our lives. I understand, through
    frustration, how it is easy to go there.
        But you look at some of the first moves, and now remember
    we are asking OPEC to produce more oil when we shut down the
    Keystone XL pipeline. We were stopping exploration and drilling
    on our Federal lands. And I am the guy that started the Climate
    Caucus here on the Republican side, and I believe in the long
    run the cleanest, least-expensive fuel is going to win the day.
    But we cannot ignore the things that we should be doing, like
    budgets through regular order, like remaining energy
    independent in the short run, so that we are not in positions
    like we currently find ourselves.
        We are 100 percent dependent for 17 key mineral resources
    and a lot of the new technology that we will be addressing
    climate issues with, who is cornering the market? It is China.
    And when we get diverted and when we do not do budgets, when we
    get down a trail that is unsustainable, we are going to end up
    with problems and issues that are going to be far greater than
    what we are talking about here today.
        American families want us to get a few things right. They
    want us to live within our means, they do not want us to borrow
    money from their kids and their grandkids, and we should all be
    working together, in the proper jurisdiction, to address these
    issues. But when it comes to the Budget Committee I think we
    ought to stay more focused on it, and I know that it has not
    been popular to do it the old-fashioned way. We have only put a
    budget together I think once in the last 20 years.
        I will end with this quote from Admiral Mike Mullen, and
    this is from Defense, and I think part of the problem here in
    D.C. is that we roll over for each other's needs, Republicans
    for Defense, when we hold it sacrosanct and we do not require
    it to do audits. The other side of the aisle getting way ahead
    of its skis when we cannot afford it, even though it might be
    well intentioned.
        He said, as it relates to defense, and we are looking at it
    right now with Putin peering into Ukraine, ``I fear red ink
    more than do the Red Menace.'' And I think that is a good
    statement that ought to be put into practice and that we ought
    to look at for across this Federal Government.
        Chairman Sanders. Thank you, Senator Braun.
        We are pleased today to have two United States Senators
    with us who will be making remarks. We begin with Senator
    Elizabeth Warren of Massachusetts who is the Chair of the
    Senate Banking, Housing, and Urban Affairs Committee's Economic
    Policy Subcommittee. She has spent years studying and writing
    about all things relating to private equity and asset
    management industries, and is a champion of working people in
    this country.
        Senator Warren, thanks so much for being with us.

     STATEMENT OF THE HONORABLE ELIZABETH WARREN, A UNITED STATES
                SENATOR FROM THE STATE OF MASSACHUSETTS

        Senator Warren. Well, thank you very much, Mr. Chairman. I
    appreciate you inviting me to participate in this hearing, and
    I appreciate the powerful work that you have been doing on the
    issue of economic concentration. You are an extraordinary and a
    tireless leader, and I am honored to be in this fight with you.
        So thanks to you, today we have the opportunity to discuss
    the very real impact that private equity and Wall Street giants
    have had on workers and communities across this country.
        For nearly a year, more than 1,100 Warrior Met Coal miners
    in Brookwood, Alabama, have been on strike. They are striking
    for nothing more than what they are owed: fair pay, fair
    benefits, and fair working conditions. All of these were
    stripped away when giant, vulture private equity firms swooped
    in to buy Warrior Met's predecessor company, Walter Energy, as
    it went through bankruptcy.
        Apollo, Blackstone, and the other private equity firms that
    bought Walter Energy in 2016 presented themselves as saviors,
    here to save the company, here to save jobs, here to save the
    day. But it was all hype. They showed up because they smelled
    profits, and they planned to boost those profits by crushing
    the company's workers. These private equity firms terminated
    the miners' collective bargaining agreement with the United
    Mine Workers. They forced a pay cut of more than 20 percent on
    workers. They cut medical, leave, and retirement benefits. And
    just to juice their profits a little more, they ended the
    company's pension and health obligations to 2,800 retired coal
    miners and their families.
        Private equity was the driving force behind all of this.
    The private equity investors in Warrior Met dictated the terms
    and conditions of the 2016 takeover of the company, and those
    same private equity investors continue to bear responsibility
    for the cuts in pay and benefits that have pressed workers to
    the wall and led to the current Warrior Met miners' strike.
        Coal mining is dangerous work. The hours are long, the
    tasks are back-breaking. But when private equity took over,
    miners were told that all that hard work just did not produce
    enough revenue to give the workers the protection and the
    security that they had earned.
        Money was supposedly tight, but the investors--Apollo,
    Blackstone, and the other private equity firms--what happened
    to them? They made out like bandits. They ran the same play
    that private equity has run over and over and over. They loaded
    Warrior Met up with debt, and then they used that debt to pay
    nearly $800 million in dividends to themselves and to other
    shareholders. And then, after sucking as much cash for
    themselves out as they possibly could, private equity sold off
    their shares and moved along to the next victims.
        Warrior Met miners are on strike today because private
    equity ripped them off. What happened to Warrior Met workers is
    what happens when these billion-dollar Wall Street firms come
    to town. Private equity squeezes as much as they can out of the
    companies and their employees, and when they think there is
    nothing left to squeeze, they leave everyone else in the dirt.
        Nationwide, private equity's takeover of retail has killed
    more than 1.3 million jobs over the last decade. It is
    responsible for jacking up prices for consumers in everything
    from education to health care. The arrival of private equity
    can even be a matter of life and death. Research even shows
    that when private equity takes over a nursing home, short-term
    mortality rates jump by about 10 percent.
         But even as they keep raking in billions of dollars in
    fees, the typical private equity fund has not managed to
    outperform the stock market since at least 2006. Think about
    that. They strip assets and squeeze workers with frightening
    energy, but they do not actually make a better rate of return
    than the average mutual fund. All that destruction comes with a
    lot of high overhead costs and the result is only modest
    returns to investors.
        This is why I introduced my Stop Wall Street Looting Act in
    2019, and why I reintroduced it a few months ago, so we can put
    an end to predatory and dangerous private equity practices.
        This is not about killing private equity. It is about
    fixing the system and protecting workers and communities. My
    bill would prevent private equity firms from walking away after
    driving companies into the ground and leaving the workers in
    the dirt. My bill prioritizes worker pay in the bankruptcy
    process and strengthens rules so that workers are more likely
    to receive severance, pensions, and other pay that they earned.
    My bill creates incentives for job retention, so that workers,
    like Warrior Met's, can benefit from a company's second chance
    in bankruptcy. And my bill ends the immunity of private equity
    firms from legal liabilities when those companies break the
    law. When workers at a plant are shortchanged or residents at a
    nursing home are hurt because private equity firms force it to
    cut corners, private equity should be on the hook.
        So Mr. Chairman, I thank you again for allowing me to
    testify today, and I appreciate your partnership on these
    issues. I am going to keep fighting to end the outrageous
    practices of private equity firms. I am going to keep fighting
    to turn the Stop Wall Street Looting Act into law. And I am
    going to keep fighting to make sure that Warrior Met workers
    get what they are rightfully owed. Thank you.
        [The prepared statement of Senator Warren appears on page
    34]
        Chairman Sanders. Senator Warren, thank you very much.
        Our next panelist is Senator Tommy Tuberville, who is the
    junior Senator from the state of Alabama, the home of the
    Warrior Met coal company. Senator Tuberville, thank you very
    much for being with us today.

     STATEMENT OF THE HONORABLE TOMMY TUBERVILLE, A UNITED STATES
                   SENATOR FROM THE STATE OF ALABAMA

        Senator Tuberville. Thank you, Chairman Sanders and Ranking
    Member Braun. Thank you for the opportunity to testify before
    the Senate Budget Committee on an issue that directly impacts
    my state of Alabama.
        And with that I want to first welcome my constituent,
    Braxton Wright, who will be testifying on the next panel.
        Next I want to associate myself with the remarks made by
    Ranking Member Braun. While this is not the first time the
    Chairman has directly involved himself in union dealings in my
    home state of Alabama, I want to make it clear and on the
    record, I do not believe the Budget Committee has jurisdiction
    over matters involving labor practices across our country. If a
    hearing like this should take place at all it should be in
    front of the Senate Health, Education, Labor, and Pension
    Committee, better known as HELP, of which I am a member.
        That being said, I think it is inappropriate for Congress
    to weigh in on labor disputes which are properly being resolved
    through the judicial system. Workers in private companies
    across our nation have the right to decide whether they want to
    join a union or not. My home state of Alabama is a right-to-
    work state, and we are proud of that fact. Our workers are not
    forced to join a union--they have the right to decide--and
    there are some companies operating in Alabama that have
    workforces who voted to have a union in place.
        So to me it is clear that the purpose of this hearing is
    for the majority to push a political agenda. This hearing is
    what I call the dream Democrat political parlay, where members
    can be pro-union, anti-Wall Street and anti-mining production
    all in one hearing.
        I want to make sure the record accurately reflects the
    facts and figures of what is being discussed today with Warrior
    Met Coal, located in Brookwood, Alabama. The jobs at Warrior
    Met Coal pay an average wage of over $97,000 annually. This is
    one of the top average wages in the state. Since Warrior Met
    Coal was established in 2016, it has created an additional 600
    jobs.
        On April 1, 2021, Warrior Met workers initiated a strike.
    Four days later, on April 5th, the International Union of Mine
    Workers of America accepted a contract proposal by Warrior Met.
    However, the local union membership took a vote and did not
    ratify it. Since then it is my understanding that there have
    been nine--I repeat, nine--contract proposals offered by
    Warrior Met to union officials, but none of these offers have
    been presented to the Alabama union workforce for a vote. How
    can the workforce get back to work if they are not shown the
    latest offers on the table? That does not make sense.
        And again, neither does this venue. The Budget Committee or
    Congress, in general, is not the proper place to litigate a
    labor dispute between private companies and their workforce.
    Clearly Congress has enacted laws and established agencies and
    practices to handle these exact type of labor disputes.
        Our Federal courts and the Department of Labor's National
    Labor Relations Board, or NLRB, have already made multiple
    decisions in this case. I strongly question the overt political
    influence of this hearing and the strong pro-union stance of
    this Committee. Actions, like holding this hearing, seek to
    call into question the judicial system and labor ruling
    decisions of the NLRB.
        I want to make it clear: Congress does not have any
    decision-making authority between Warrior Met Coal and union
    members, nor should we get involved in how they work out their
    own labor agreements. Congress has decision-making authority
    over the Federal budget and how much money our government
    spends. That is what I think the Committee should be paying
    attention to, not the labor disputes in private companies in
    Alabama.
        We have to get our fiscal house in order. Inflation has
    engulfed our economy. Families face bare grocery shelves and
    gas is more than $5 a gallon in some places. Our national debt
    has gone over $30 trillion. That amounts to a credit bill for
    $240,000 per taxpayer in this country. We need to return to
    free market enterprise with less government intervention.
        In closing, it is my hope that Warrior Met Coal and the
    union workforce can come to a beneficial agreement for all
    involved and that Congress will not try to tip the scales in
    one direction. We must get Americans to work so that our
    economy can once again thrive.
        I thank the Committee for their time and consideration of
    my comments. Thank you, Mr. Chairman.
        [The prepared statement of Senator Tuberville appears on
    page 36]
        Chairman Sanders. Thank you very much, Senator Tuberville.
        And now we will hear from the second panel.
        [Pause.]
        Okay. This panel will consist of Cecil Roberts, who is the
    International President of the United Mine Workers of America.
    President Roberts is a six-generation coal miner, raised in
    Kanawha County, West Virginia. He rallies with Warrior Met
    workers on the picket line in Alabama every week.
        Our second panelist is Braxton Wright, who is a mine
    employee at Warrior Met and a member of the United Mine Workers
    Local 2368. He has worked at the Brookwood mine for 17 years
    and has been on strike since April 1, 2021.
        We have also invited, as I mentioned earlier, to this
    hearing the CEO of Warrior Met, Walter J. Scheller III.
    Unfortunately, he has chosen not to be with us.
        We will now hear from Cecil Roberts, the International
    President of the United Mine Workers of America. Mr. Roberts,
    thanks so much for being with us.

      STATEMENT OF CECIL ROBERTS, INTERNATIONAL PRESIDENT, UNITED
                        MINE WORKERS OF AMERICA

        Mr. Roberts. Thank you, Senator, for scheduling this
    hearing and inviting us to participate. We appreciate the
    willingness to hear from workers here today. And I want to
    thank Ranking Member Braun also for allowing us to be here
    today and the panelists here, the Senators here on this
    Committee. My good friend, Senator Kaine, is here. This is an
    opportunity that workers do not always have, to have their
    voice heard here on Capitol Hill.
        Today is the 323rd day of our strike in Alabama. I would
    like to take this opportunity to invite Senator Tuberville to
    stop by, at his convenience, and maybe he could be of some help
    with respect to encouraging Warrior Met to join with the United
    Mine Workers and fashion an agreement to end this strike.
        Three hundred twenty-three days, but this did not start 323
    days ago. I think it would be fair to say that not a single
    coal miner ever caused a bankruptcy. No one ever asked a
    shuttle car operator, ``Do you want us to invest some money
    here or there?'' They do not ask the continuous miner that.
    They do not ask the long wall operator that. All these
    decisions that lead to bankruptcy are made by others than to
    coal miners.
        In 2015, there was a bankruptcy filing by Walter Energy,
    and that hearing for that bankruptcy took place in Alabama. The
    first thing that happened in this bankruptcy is something that
    has been alluded to here by both you and Senator Warren.
    Retirees, 2,700 of them, sitting at home, 75, 85 years old,
    given their lives to this industry, get a notice. Well, the
    bankruptcy judge decided you do not have health care.
        The second thing that happens is the pension plan goes
    away. The next thing that happens is that the collective
    bargaining agreement that was ratified by an overwhelming
    majority of these workers, that was in place at the time is
    terminated. The next thing that happens is what? Most people do
    not know this. You do not have a job here anymore.
        So, in reality--people get discharged in bankruptcy court.
    Now who decided that that was going to happen? How did that
    come about?
        At the time, these investors from New York, mainly, were
    playing a role already with respect to what was going on in the
    bankruptcy court. So now workers who had nothing, absolutely
    nothing to do with the filing of this bankruptcy or the
    creating of this bankruptcy, are now being told, ``Well, you
    have got to fix this.'' The workers have to fix this. How in
    the world is that going to take place?
        The first thing that happens is we are told, by this
    private equity group, ``We do not have to hire a single one of
    your members back. They are unemployed, as far as we are
    concerned. Now, if you want to get your members back to work
    you have to deal with us and reach an understanding with us,
    and if that understanding is not something we want then there
    will be an opportunity for your members, who have got 40 years
    in this coal mine, 30 years, 20 years, been there forever,
    producing coal for this company that was there previously.''
        Now they are telling us, ``You do not have any leverage.''
    You know what? They are right. That is the truth. Can you
    imagine trying to bargain with somebody that is taking coal
    mines over, who came here from New York and do not even know
    what color the coal is, do not have any idea of what happens in
    a coal mine, but they are telling us, ``We are not hiring those
    people back unless you do certain things,'' and they have
    already gotten everything that you could ever ask for, as an
    investor or an employer, out of the bankruptcy court. You have
    cancelled health care for retirees. You have terminated the
    contracted. You have now terminated the employees unless your
    union bargains their way back in.
        So now the union is at the bargaining table with this
    group. And we do reach an agreement. It was a terrible
    agreement, but the workers were told the truth. If we do not
    reach an agreement with this group, they do not have to hire
    us, if we will not be here to represent you, and who knows what
    is going to happen to this place. No entity should have that
    kind of power delegated to them by the laws that are passed
    here in this location that we are sitting now. That is the law.
    Bankruptcy laws are horrendous for working-class people. There
    have been 60-some of these in the coal fields of Appalachia. No
    group of workers should be treated like that.
        And let me tell you what has happened since that contract
    was ratified. It has been five-plus years. Senator Tuberville
    said how much money they make. Yeah, you go in the mines and
    spend 12 hours a day, 6 days a week, for a year, 2 years, 3
    years, 4 years, 5 years. These workers are totally exhausted
    and they are totally fed up.
        About the contract that was voted on, the one thing that
    this Committee should know, it failed, 95-5. These other
    agreements he is talking about are the same agreement. They
    changed this word. They changed that word. New proposal. That
    is what we have been faced with for about a year now. I think
    it is disgraceful that these workers have been on strike this
    long of a time.
        And you are going to hear momentarily from Braxton Wright,
    who has been on this picket line daily, and he is one of the
    leaders of our union on that level. His wife, Haeden, has
    headed up our Auxiliary. But there are 800 of these families
    that have not only suffered through this strike but they have
    suffered for five-plus years because of what happened to them
    when these investors rode into town and could not spell coal,
    could not tell you what color it is. All they knew is there was
    some money to be made here. And they are gone now. They are
    gone now. And now we are tasked with how we keep this company
    profitable.
        Coal is selling, by the way, for about $500 a ton. This is
    metallurgical coal. You would have to work at it to not make
    money with respect to the price of coal being at that level.
        With that I yield, Mr. Chairman.
        [The prepared statement of Mr. Roberts appears on page 37]
        Chairman Sanders. Mr. Roberts, thank you very much.
        Our next panelist is Braxton Wright, who is a mine employee
    at Warrior Met and a member of UMWA Local 2368. He has worked
    at the Brookwood mine for 17 years. He has been on strike since
    April 1, 2021.
        Mr. Wright, thanks so much for being with us.

     STATEMENT OF BRAXTON WRIGHT, MINE EMPLOYEE, WARRIOR MET COAL,
                      AND MEMBER, UMWA LOCAL 2368

        Mr. Wright. Thank you for having me.
        Chairman Sanders, Ranking Member Braun, distinguished
    members of the Committee, my name is Braxton Wright and I have
    worked at the mines in Brookwood, Alabama for over 17 years. I
    come from a family of coal miners. My grandfather was injured
    in a mining accident at Black Diamond Mines in West Blocton,
    and later passed away due to his injuries. My father worked in
    the coal mines a short time. My father-in-law is a retired UMWA
    miner who retired at the time of the Walter Energy bankruptcy
    with more than 30 years.
        Today I would like to speak with you about how private
    equity firms such as Apollo, Blackstone, and other private
    equity who held stock in Walter Energy dictated the terms and
    conditions of the 2016 takeover of Walter Energy, which was
    renamed Warrior Met Coal, and what that means to workers,
    families, and communities. These private equity investors bear
    much of the responsibility for the cuts in pay and benefits,
    and have led to the United Mine Workers' unfair labor practice
    strike at Warrior Met.
        The past five years working under this bankruptcy contract
    has been difficult for the miners and their families. These
    private equity groups have played a role in the exploitation of
    the UMWA miners as well as numerous other workers who do not
    have the benefit of a union contract.
        Due to the Chapter 11 Bankruptcy filed by Walter Energy in
    2016, miners took massive concessions in order to make the
    company profitable again. Some of these concessions included a
    $6-an-hour pay cut, depending on your pay grade. It, by itself,
    placed a huge strain on workers and their families. When you
    are required to work 12 hours a day, 6 to 7 days a week, you
    are lucky if you see your spouse or children more than a few
    hours a day.
        Before the bankruptcy, many spouses did not have to work.
    After the bankruptcy, many spouses were forced to work outside
    the home while still being the primary caregiver. So children
    saw both parents less as a result of the cuts in the bankruptcy
    contract.
        It would break your heart to hear how many times my oldest
    daughter, Averi, would ask me, ``Why weren't you at my game?''
    ``Why didn't you come to my field trip or awards day at
    school?'' ``Why can't you go with us to the park?'' Every time
    I had to answer, ``I had to work'' or ``I had to sleep,''
    knowing that my child deserved to have time with both her
    parents. These have been the voices of hundreds of children
    whose parents worked at Warrior Met Coal.
        While Warrior Met claims to give us eight holidays, in
    actuality the only dedicated holidays we spent with our
    families were Thanksgiving, Christmas Eve, and Christmas Day.
        The push to increase production and profits for investors
    at the expense of workers was amplified more with the four-
    strike policy implemented in 2016. All absences, late arrivals,
    or early outs resulted in a strike. On the fourth occurrence
    you would be fired. This policy was a huge source of stress and
    worry for families. If you arrived a few minutes late you were
    still required to work but you would still receive a strike. If
    you were involved in an accident, had a medical emergency, your
    child was sick or hospitalized, your spouse was in labor or
    hospitalized, it did not matter. If you could not give 24-hour
    notice you would receive a strike.
        My brothers and sisters have been given strikes for having
    accidents on the way to work and being late. Our spouses
    learned to not call to tell us about accidents or emergencies
    at home until after we were done with our shift, out of fear
    that we would receive a strike. When my own daughter was in the
    hospital and I was working my 12-hour overnight shift, my wife
    was afraid to tell me she had been admitted until my shift
    ended at 7 a.m., because if I left she knew I would receive a
    strike. I worked my shift in Brookwood then drove to the
    hospital and then drove back to the mines, back and forth for
    three days in order to be with my family.
        These unfair labor practices and conditions led the UMWA
    rank-and-file membership to strike starting on April 1st of
    2021. We are still fighting for a better contract for
    ourselves, our families, and our communities. We are waiting
    for Warrior Met, whose largest shareholder is BlackRock, to
    come to the table and offer a fair contract to those of us
    whose labor has been used to make them billions.
        This is why I am asking that you support the Stop Wall
    Street Looting Act, which will help to reform the private
    equity industry. This bill would help workers, families, and
    communities by forcing private investment firms like BlackRock
    to take responsibility for the actions of the companies they
    take over. Management at Warrior Met has stated, ``We will
    starve them out'' and ``They aren't worth anything else.'' The
    investment firms that own Warrior Met need to be held
    accountable for these statements and the treatment workers have
    endured not only while on strike but for the past five years.
        While the company I have helped make billions of dollars
    over the past decade has turned their back on the workers
    during our strike, the UMWA has provided strike pay and
    insurance for the miners while on strike. Other unions and
    other workers across the country have provided solidarity and
    direct support. The Auxiliary, made up of the families of the
    mine workers, has worked tirelessly to bring in support for us
    to provide food, clothing, baby items, and holiday gifts to
    striking families.
        All workers deserve respect in our workplace and fair
    compensation for our labor. We will continue to fight for the
    UMWA brothers and sisters and we will continue to speak out
    against the exploitation of workers by companies funded by
    private equity. We will continue to stand up for ourselves but
    also for all the workers, families, and communities suffering
    under the same circumstances.
        I have traveled with the UMWA to New York City to bring the
    strike to the doorstep of BlackRock and call on them to take
    action to support the workers and communities they invest in.
    BlackRock, Vanguard, and the other private equity owners have
    responded with silence. I would like to ask Congress to take
    action to ensure that workers and families do not continue to
    be the victims of these private equity firms who do not care if
    workers are pushed to the limits as long as they are receiving
    the highest return on investment possible.
        Thank you for allowing me to be here today and to share a
    glimpse of why we are striking in Brookwood.
        [The prepared statement of Mr. Wright appears on page 105]
        Chairman Sanders. Mr. Wright, thank you very much for being
    with us.
        I would imagine that working people and their families who
    have been without a regular paycheck for almost a year are
    hurting. Can you talk a little bit about what it means to be on
    strike for over 300 days? What does it mean to the workers who
    are on strike, their kids, their families? Can you say a word
    about that?
        Mr. Wright. It has been difficult. I mean, we have had to
    cut back on non-necessary items. We do not get to get out as
    much as maybe we used to. You know, vacations are cut off or
    ended. At times, when my wife was sick, her pay was even cut
    out for a month. So it was kind of like, you know, playing
    Russian roulette with bills. You would throw them out on the
    table and pick up which one you are going to pay at the time.
        But it is difficult to tell your children that you cannot
    do things because you are not at work right now, that you are
    on strike. You know, most of us have picked up other jobs at
    other places to make ends meet, but it is not the same as what
    we were accustomed to.
        Chairman Sanders. How do folks feel about a company, as Mr.
    Roberts mentioned, that knows very little about the industry,
    making huge profits, providing stock buybacks at the same time
    as workers are experiencing major cuts in wages and health
    care? How do people respond to that?
        Mr. Wright. It is not fair. I mean, they exploit our work.
    They work us on skeleton crews with less than what we had
    before the strike. And then we get to watch them, you know, sit
    in the office and make $4 million a year, or $1.2 million as a
    secretary, and say that we do not deserve what we make now. It
    is tough. It is tough, you know. It is tough seeing their lack
    of just care for their workers and their employees.
        Chairman Sanders. Okay. Let me ask Mr. Roberts a question.
    Mr. Roberts, has Warrior Met come back to the negotiating table
    since you all went on strike in April of last year?
        Mr. Roberts. Yes is the answer to that, but quite frankly
    there has not been any progress made at the bargaining table.
    The nine contracts that Senator Tuberville alluded to are
    basically the same contract that was voted down 95-5 by our
    membership, and if those contracts had been put to the
    membership they would say, ``What is the difference in these
    contracts?'' and you would really have to search for the
    difference. They just continued to put the same contract on the
    table over and over and over.
        I think what is going on here, and there is some evidence
    of this, by the way, they are trying to starve the union out.
    They are trying to starve the workers out. And as we speak here
    today, we are in a mess all over the United States, right now.
    Advertising for workers, having job fairs, to come to Alabama
    and take the jobs of Braxton and his brothers and sisters on
    strike. So we have got the strikebreaker piece of this at work
    also. They are paying those people more money and higher
    benefits than they have offered at the bargaining table for
    these workers. And it is clear, Senator, what is happening
    here.
        Jay Gold, an industrialist from the 1920s, said, ``I could
    hire half the working class to kill the other half.'' That is
    apparently what is going on here. There is a job fair that is
    being held either today or this week in Pennsylvania. You can
    drive through the coal fields of West Virginia and Appalachia,
    and you will see billboards, ``Come to Alabama and work for
    Warrior Met. This is the number you call.''
        So this is eliciting people to come to Alabama, drive by
    these folks on the picket line, and to take their jobs.
        Chairman Sanders. Remind us again what kind of pay cuts and
    health care benefit cuts have workers experienced in this
    process.
        Mr. Roberts. Originally, those pay cuts were $6 to $8, in
    that range. Somewhere in the second, third year of the contract
    Warrior Met realized that people are not going to stay here and
    work for those kinds of wages, so they increased the wages of
    the two top classifications. They raised the wages for the
    lower classifications, but they are still $2 or $3 below what
    everybody else is making in neighboring mines that are
    organized. So they realized they had to do that.
        But here is the thing that we need to mention. The health
    care plan that was part of the original contract, and it still
    is, there is a $7,000 out-of-pocket cost that each family might
    have to pay. So you take a wage cut, take money out of the
    household, and if you happen to have a sick child, as was just
    alluded to by my brother here, then you are reaching into the
    savings you had before to try to provide health care for your
    families.
        Chairman Sanders. What kind of wage increases are they
    offering now?
        Mr. Roberts. The contract that was voted down had about, I
    think, $1.50 over five years.
        Chairman Sanders. $1.50 over five years.
        Mr. Roberts. Five years.
        Chairman Sanders. Averaging $0.30 an hour at a time when
    inflation is at 7 percent.
        Mr. Roberts. That is correct.
        Chairman Sanders. Okay. Senator Braun.
        Senator Braun. Thank you, Mr. Chairman.
        I come from the southwestern part of Indiana, where it is
    the only real mining in our state. I have been underground
    mines. Surface mining is probably more dominant there.
        Braxton, you have got one of the hardest jobs that would be
    out there. When I looked, especially in the underground mines,
    at what you put up with, that is something most people would
    choose not to do.
        I think today we are talking about the issue that you are
    wrestling with, with the company. I think you have got to be
    careful, too, that you do not homogenize big corporations and
    private equity in with the rest of what drives this country,
    which would be businesses like mine, where you treat employees
    like you are a family.
        And in what we are going through currently, I think it has
    given due attention to issues, and you have got this tug-of-war
    between more and more concentrated industries, and you are in a
    particular pickle with it.
        I want to be on the record citing that.
        My question is for Mr. Roberts. How many of the workers
    that you represent are coal miners, roughly, by percentage and
    number if you have got it handy.
        Mr. Roberts. Probably 80 percent.
        Senator Braun. Eighty percent. And then when you look at
    what has beset the industry--businesses, owners, and workers
    themselves--current policies to me look like, especially in
    light of China building a coal-fired plant weekly over there,
    that we are trying to deconstruct the industry. I had the issue
    of pulling permits at the Twin Metals facility up in Minnesota.
        Mr. Roberts, does that bother you, in a broader sense, in
    terms of where mining is headed, and how much do you think the
    current Administration is kind of pushing you over the edge?
        Mr. Roberts. Thank you for the question, Senator. The
    number of coal miners that have lost their jobs in the last 10
    years we put at about 40,000. Every coal mining job,
    particularly in Appalachia, also supports about four other
    jobs, and if you do the math on that you are talking about
    200,000 people have lost their jobs.
        There are a variety of reasons people have lost their jobs.
    I worked in a metallurgical coal mine myself, and I was
    fortunate enough to leave that mine in 1977, and membership has
    chosen to allow me to continue doing what I am doing since
    1977, by vote of the membership.
        But the first big hit to the coal industry was not
    regulations having to do with the generation of electricity.
    The first big hit was the closures of most of the steel
    industry in the United States and moving that offshore. And we
    have spoken about that. If we wanted to bring jobs back to the
    coal fields, if we had a steel industry in the United States of
    America--we have spoken repeatedly here on Capitol Hill about
    how you bring jobs back to Appalachia. That is one way you
    could do that. Because when the steel industry shut down in
    America, the marketplace moved to China, Brazil, and other
    locations. And if we had those jobs back here we would be able
    to reopen many of these metallurgical coal mines.
        Where I am from, I was born as far up the holler as you
    could get on Cabin Creek. The blacktop ended and the dirt road
    started. Shamrock Holler is a suburb of Cabin Creek Holler, so
    that is where I am from. And all that coal, K4 coming down the
    holler, so to speak, up to Dakota, that is all metallurgical
    coal. Winterford was all metallurgical. They were gone. The
    coal is not gone. They just cannot ship that coal economically
    across the ocean and compete.
        So we have spoken out. So this is how you get jobs back in
    Appalachia.
        With respect to the generation of electricity in this
    country, we never denied for one minute the existence of
    climate change, because I think that debate has been settled.
    What we argue for is a way to allow people to keep their jobs
    as long as possible, use technology and investment in
    technology to generate electricity. And we realize--and I think
    you do not have to much more than look around--that as time
    goes on, less and less coal is being utilized to generate
    electricity in this country.
        So we are not just sitting and watching these things
    happen. We have ideas, and I know that might shock some people
    that a union has got ideas about the economy. And we have
    testified to those concepts here on Capitol Hill many times.
        So, you know, it bothers me any time somebody loses their
    job, but one of the things that has repeatedly happened in this
    nation--and you can go back 100 years if you want--whenever an
    industry winds down we do not have a program that exists in
    this United States on how to deal with those workers losing
    their jobs. And we have spoken out on that too. We think there
    should be some kind of supplemental pay for those workers as
    you transition, some opportunities to be trained, and those
    jobs to be here.
        For example, right now two-thirds--I do not mean to get so
    long-winded but you asked, and I will shut up here in a
    moment--but two-thirds of all the windmills in the world are
    made in China, and they ought to be made here. And I would say
    that same thing for solar panels.
        Senator Braun. Well, thank you, and very briefly, I think
    that you have got to always be aware of where you want to go in
    the long run. And I said it earlier. The cleanest, the least-
    expensive fuel is going to win the day. But you have got to be
    careful that you do not do things in the short run that
    actually accelerate what has already been a process for coal
    miners in the wrong direction.
        I think this Administration needs to pay more attention on
    distinguishing between the two. And I think the coal miners
    ought to speak up, because in my opinion, they are not
    distinguishing between what we may need to do to keep the
    industry alive so it could survive in the long run when other
    technology might make it relevant. Thank you.
        Chairman Sanders. Thank you. Senator Kaine.
        Senator Kaine. Thank you, Mr. Chairman and Ranking Member
    Braun, and thanks to our witnesses, one of whom is a friend and
    one of, even though, Mr. Wright, I have not met you, I know an
    awful lot of Virginians just like you in Tazewell, Buchanan,
    Russell, and Wise counties. I have worked with them for many,
    many years, and I am really happy you are here today.
        I will say, about President Roberts, doing what we do, all
    of us, is not easy. If you are doing this kind of work and you
    are in politics it is more than a 9-to-5. It is a nights and
    weekends job. I am in my 28th year since I ran for City Council
    in Richmond, and you sometimes wonder like is it worth it? It
    is worth it to have the chance to help folks every day, but it
    is also worth it because I have met people that I never would
    have met had I not done this. And I consider President Roberts
    just, you know, it is almost worth the price of admission of
    being in public office 28 years that I met you and we are
    friends, and I am so inspired by your leadership.
        I also just, you know, want to say, I am sitting here
    listening to this hearing today and I am thinking about my
    father who ran an ironworker-organized welding and metalworking
    shop in the stockyards of Kansas City. And I just grew up in a
    house that was a management house that did not hate labor but
    actually really liked labor. You know, he had six employees in
    a good year, and in a really good year, seven or eight, plus my
    two brothers and me and my mother. And the fact that so much of
    corporate America just seems to hate unions, I just did not
    come up in a household like that.
        You know, my dad told me that his workers' training and
    skill were going to put my brothers and I through college and
    that my dad's business acumen was going to put his workers'
    kids through college. It was a team. And there could be
    disagreements, just like there can be disagreements within any
    family, but it was a team. And it was not that the union was
    our enemy, and we have got to bust the union, and we have got
    to grind them to nothing, and we have got to bankrupt out their
    contracts and bring in people. It was never about that.
        My dad got asked to be on the board of the Ironworkers
    Pension Fund. There were three employer reps and three employee
    reps on that board, and I remember when they asked him to do it
    he was like, ``I only have six employees. This is a big union.
    You have got big employers all over the country. Why would you
    ask a guy like me, with a small, little shop in the stockyards
    of Kansas City?'' They said, ``Because you treat people with
    respect.''
        Why would we not treat people with respect? Why would we
    not treat union workers with respect? I mean, yeah, it is about
    dollars. Yeah, it is about benefits. But underneath all of that
    it is about respect. It should be about respect. And I just
    thank God I was raised in the kind of house I was raised in,
    and I am just so puzzled at the behavior of those who would
    want to grind down people because they want to exercise a right
    that is protected in the law to act collectively.
        President Roberts, you and I, we worked on some important
    issues in the last few years--saving miners' health care. I
    remember being around a table in Castlewood, Virginia, with a
    lot of mining families who were really worried because they
    were about a week away from losing health care benefits. We
    worked together to save them. Saving pensions of UMWA members--
    we worked on that together. But there is an issue pending right
    now with us that we have got to work together on and that is
    the Black Lung Disability Trust Fund. And I just want to ask
    you about this.
        The black lung issues are not getting easier. They are
    getting tougher. The treatment is getting tougher in a time of
    COVID, where people have respiratory issues from COVID. The
    coincidence of COVID and black lung is much more potentially
    damaging and fatal to people.
        Congress did not act at the end of the calendar year, and
    the elevated excise tax that funds the Black Lung Trust fund,
    to take care of people who are doing this extremely hard work
    is now challenged.
        Mr. President, I would like you to just address this
    question. What is the importance of us fully funding this Black
    Lung Disability Trust Fund with a coal excise tax, and what are
    the implications if we do not resort to the level it was until
    December 31, 2021?
        Mr. Roberts. Well first of all, thank you for the kind
    remarks, Senator, and you have been a friend probably 40 years
    ago. I am getting older and I want to thank both you and
    Senator Sanders for helping save the pensions and the health
    care of, I guess at the time was 85,000 to 90,000 people. That
    has been one of the most remarkable pieces of legislation ever
    passed here, in this Congress, as far as I am concerned. And it
    led to others having their protection also.
        But getting to your point, I would point out this industry
    and this government never recognized pneumoconiosis is an
    occupational illness until 1969, and it took an explosion in
    West Virginia, killing 78 miners, before they ever did.
        But to answer your question, if we do not come up with a
    funding mechanism here--which there is one that exists but we
    have just let it terminate, for all intents and purposes. It is
    half of what it was. Even at full funding levels it was not
    adequate to keep up with the number of people who are suffering
    from pneumoconiosis and dying in this country. There have been
    probably 100,000 people die since 1969, from this disease.
        And in your area, southwest Virginia, eastern Kentucky, and
    southern West Virginia, silica is running wild there. That is
    the other thing we would ask Congress to think about. Young
    people are getting pneumoconiosis mainly from silica, and we
    need a silica standard to save their lives, but we need to fund
    this program. If we do not fund it, at some point in time
    Congress is going to say we are not taking any more money out
    of the general Treasury to pay these benefits. That is our
    fear, and that is why we need to deal with this.
        Senator Kaine. Thank you. Thank you, Mr. Chairman.
        Chairman Sanders. Thank you, Senator Kaine. Senator Toomey
    I believe is with us virtually. Senator Toomey, are you there?
        Okay. I believe Senator Warner is with us virtually.
        Senator Warner. Thank you, Mr. Chairman, and I am glad you
    are hosting this hearing. I want to first of all echo what my
    friend and colleague, Senator Kaine, said to President Roberts
    that we need those black lung benefits. And as President
    Roberts just indicated, you know, the incidence of this disease
    hitting much, much younger miners is stunning. Tim and I both
    see it in southwest Virginia, and I know our colleagues in West
    Virginia see it as well.
        I know we are talking about private equity in a large way.
    I just want to bring to the Committee's attention--and I do not
    want to shock the Chairman on this because he knows that I have
    been viewed as sometimes to be pro-business. I am, but some of
    these private equity firms--I am going to raise a question
    about bankruptcy.
        But I just wanted the Committee to know that, you know,
    over the last couple of years the Intelligence Committee has
    been hosting a series of classified briefings to alert business
    and academia and others about the challenges posed by the
    Communist Party in China. When we criticize China I want to
    make clear my beef is with the Communist Party, Xi Jinping's
    leadership, and their intellectual property theft, their
    authoritarian behavior. It is not against the Chinese people,
    and obviously not against Chinese Americans.
        But the practices of the Communist Party in China, we have
    shared on a regular basis with venture capital, with banks,
    with manufacturers, with the Chamber of Commerce, with college
    presidents. The only group--and I hate to give Chairman Sanders
    more ammunition--but the only group that would not even sit and
    listen was private equity, because these private equity
    companies were making so much money investing in Chinese
    technology firms--the Alibabas, the Huaweis, the Tencents--that
    were then being used to create an Orwellian surveillance state
    in China that they did not want to hear the truth.
        Now finally we are restarting these classified briefings.
    We actually met with counties from around the country
    yesterday. NACo was in town--again, bipartisan-just to lay out
    these challenges. The private equities indicated they would
    finally sit and hear the truth, maybe because finally the
    Chinese government is clapping down on some of these tech
    companies where they made so much money. But it was
    embarrassing that this part of our financial network would not
    even hear some of the challenges posed by the Communist Party
    in China.
        That brings us to the question of the hearing, though.
    President Roberts, one of the things we have seen--I remember
    Westmoreland Coal when it went in--we have got bankruptcy
    provisions that allow workers and their pension benefits--I
    think Category 4. I know there was a case in Alabama that you
    all worked on.
        But a bankruptcy code, and I have been trying to work with
    Joe Manchin on, re-establishing a higher priority for workers
    and their pensions, if a company goes under. That is going to
    take some changes under both Chapter 11 and Chapter 7
    bankruptcy.
        I know this is something your members have had to deal
    with, unfortunately on way-too-often a basis, but can you speak
    to this issue about how we can make a bankruptcy code that
    takes care of creditors but it actually is fair to workers and
    pensioners as well?
        Mr. Roberts. Thank you, Senator, and I thank you for your
    friendship to not only me but to coal miners for many, many
    years.
        Yes, the problem with bankruptcy--there are multiple
    problems, but for workers that have to get into the back of the
    line and even fight for their jobs, I found that very
    offensive, I found that to be morally wrong, and I think
    Congress needs to deal with that aspect of it, if they do not
    deal with anything else.
        Pensions and health care that people who have earned should
    be protected in bankruptcy. And I support the efforts that
    Senator Warner and Senator Manchin are trying to make any
    bankruptcy laws in this country a little more fair.
        But one of the things that invites these people to come in
    and try to do, like what happened here at Warrior Met and has
    happened 60-some times in the coal fields over the past couple
    of years, is the fact that workers do not have a chance in
    bankruptcy. And it goes to what I said in my opening statement,
    is that workers never create bankruptcy but they are asked to
    pay for it, and that should not be the way things work in the
    United States of America.
        Senator Warner. Thank you, President Roberts, and thank
    you, Mr. Chairman, for this hearing.
        Chairman Sanders. Thank you, Senator Warner.
        Senator Toomey, are you there?
        [No response.]
        Okay. I think with that let me thank the panel, and now we
    will hear from Panel 3. Gentlemen, thanks very much.
        Mr. Roberts. Thank you very much, Senator, for the hearing.
        [Pause.]
        Chairman Sanders. Okay. This is our third and last panel.
    Two of our guests are virtual and two are here in person. Our
    virtual guests are Nomi Prins, who is an economist and author
    and a former managing director at Goldman Sachs. She is a
    former Wall Street banker. Dr. Prins' work sheds a light on the
    manipulation and unethical practices of the banking industry.
    We will hear from her in a moment.
        James Kwak is a research fellow at the University of
    Connecticut School of Law. He researches business law and
    corporate finance. He is the author of the book ``13 Bankers:
    The Wall Street Takeover and the Next Financial Meltdown.''
        Douglas Holtz-Eakin, who is with us here in person, is the
    President of the American Action Forum. He is the former
    Director of the Congressional Budget Office and served on
    President George H. W. Bush's Council of Economic Advisors.
        And Duncan Wood, who is also with us, is Vice President for
    Strategy and New Initiatives at the Wilson Center. His work
    focuses on North American politics and Mexico and U.S. Mexican
    ties. He lectures and publishes on hemispheric issues and
    relations. And we thank all of our panelists for being with us.
         Why don't we begin virtually with Nomi Prins.

     STATEMENT OF NOMI PRINS, PH.D., ECONOMIST AND AUTHOR, FORMER
                    MANAGING DIRECTOR, GOLDMAN SACHS

        Ms. Prins. Thank you, Chairman Sanders and Senator Braun
    for the privilege and opportunity to speak before you today. I
    am a former managing director of Goldman Sachs. Before that, I
    ran the international analytics group as a senior managing
    director at Bear Stearns in London. I have held positions at
    Lehman Brothers and the Chase Manhattan Bank.
        After years on Wall Street, the levels of greed,
    unparalleled influence, and unethical practices in the industry
    caused me to step away. Since then, I have worked to uncover
    the manner in which the global economy and our financial system
    has become so unequal, unjust, and fractured.
        In 2008, two of the investment banks that I had once worked
    for went bankrupt and saw their risky bets and bad practices
    nearly tank the global economy. Those banks no longer exist.
    However, the economy remains on edge.
        Today, nearly a decade and a half later, we sit at another
    precipice of grave risk. Asset management behemoths and private
    equity institutions have amplified the distortion in financial
    markets. The magnitude of their influence over securities and
    companies has no historical comparison. Their unfettered access
    to policymakers and major institutions spans the world. These
    new financial giants are leaving smaller market participants
    from all parts of the economic spectrum exposed to concentrated
    systemic risk and diminished representation.
        Yes, it is true that Wall Street banks remain as powerful
    and influential as ever. But now asset management firms, with
    trillions of dollars at their disposal, have become more
    influential than governments and the regulatory entities
    responsible for keeping them in check.
        It is important to understand that at the top of this
    financial hierarchy stands BlackRock. The financial goliath
    manages $10 trillion in assets. That is more money than the
    size of any other country's GDP besides China or the United
    States. BlackRock's meteoric rise has seen its assets triple
    since 2012, and nearly double from five years ago.
        The world's largest asset manager acts as a money manager,
    private equity fund, institutional investor, trading software
    platform, and government partner. What has truly made it
    untouchable is its ability to produce and attract capital to
    Exchange Traded Funds or ETFs. ETFs are attractive because they
    offer intraday liquidity for both buyers and sellers in
    financial markets. But what the shock from the early days of
    the pandemic in 2020 showed us was that frenetic ETF activity
    can intensify panic in the markets. Quick outflows executed in
    bulk can exacerbate a falling market, which can hurt those that
    can afford it least, the most.
        Ultimately, leveraging its government connections,
    BlackRock was awarded a no-bid contract to manage the Federal
    Reserve's corporate bond buying program. The contract allowed
    BlackRock the opportunity to essentially support its own
    investment grade bond ETFs in the midst of a pressurized
    environment.
        BlackRock and its executives had access to confidential
    information and the ability to formulate business decisions for
    themselves and their large clients. No other institution in the
    world has or had such access during or since that crisis.
        Currently, BlackRock, Vanguard, and State Street manage
    more than $22 trillion in global assets. For comparison, U.S.
    GDP stands just shy of $24 trillion. The asset management
    industry has only grown more concentrated at the top over the
    past decade.
        These Big Three dominate the market. Their growing
    stranglehold on U.S. equity participation provides them greater
    chances to hold veto power or directly influence business
    strategies for nearly all major corporate decisions.
        As these institutions expand further into the world of
    private equity, their ability to dictate corporate control and
    outright ownership in every sector of the economy will have a
    greater human cost. Private equity business practices are
    largely designed to extract capital, not build it. As a result,
    small businesses and communities caught in the private equity
    crossfire will come under greater control of big finance that
    puts cost and job cutting ahead of worker stability.
        Today, BlackRock and these other institutions have expanded
    to such a magnitude that they effectively are the market. This
    represents a monopoly sort of influence over competition,
    assets, and transactions. It elevates the systemic risk that
    the global financial system faces. This renders everyday
    people, retail investors, workers and anyone with a 401(k)-
    retirement plan exposed to the risk that these massive
    trillion-dollar institutions pose. These individual
    shareholders of ETFs or other funds, seeking to invest their
    hard-earned money in the markets and build for retirement, have
    had their ability to obtain a seat at the financial table
    reduced.
        By creating a shareholder pass-through structure, similar
    to the kind that Wall Street has used for decades, we can
    strive to even the playing field and reduce the immense power
    of mega money managers. This would enable participants invested
    in ETFs or other funds to hold shareholder rights with respect
    to the corporations in which these vehicles are invested.
    Currently, these rights are retained by the asset management
    companies themselves.
        We should enact policies focused on reducing the sheer size
    and concentration of asset-management institutions and private
    equity firms to establish a more efficient, transparent, and
    equitable marketplace. The risk of corporate wrong-doing,
    fiscal mishaps, unfair tax advantages, and conflicts of
    interest is too great to ignore. So is the possibility of
    extreme price movements due to the leverage and trading
    patterns of these mammoth asset management institutions. Our
    financial stability and security depends on addressing this.
        Thank you.
        [The prepared statement of Ms. Prins appears on page 108]
        Chairman Sanders. Thank you very much, Dr. Prins.
        Our next panelist is James Kwak, a research fellow at the
    University of Connecticut School of Law. Mr. Kwak, thank you
    very much for being with us.

    STATEMENT OF JAMES KWAK, PH.D., RESEARCH FELLOW, UNIVERSITY OF
                       CONNECTICUT SCHOOL OF LAW

        Mr. Kwak. Thank you. Thank you, Chairman Sanders, Ranking
    Member Braun, and the entire Committee for your time today.
        I apologize I cannot be with you today. For the past 10
    years I taught corporate law and corporate finance as a
    professor at the University of Connecticut. Previously I co-
    founded Guidewire Software, which has been a public company
    since 2012.
        My topic today is the concentration of economic power.
    There are three major types of concentrated economic power in
    the United States. One is technology giants, such as Amazon or
    Facebook, and we know all about them. The second is large
    private equity firms, each of which can control well over 200
    companies. Senator Warren already spoke about how private
    equity firms use their power.
        The third is large asset management firms, primarily, as
    Dr. Prins said, BlackRock, Vanguard, and State Street. As she
    said, these three companies are major shareholders of virtually
    every large public corporation. This type of concentrated
    economic power is probably the least known of the three, so I
    focus on it here.
        Our economy is based on the principle of shareholder
    capitalism. The idea is that a corporation is controlled by its
    shareholders, who have the power to elect the board of
    directors. The basic idea is that the people who invest their
    money get to make the decisions. Now this system is neither
    necessary nor is it ideal, but it is how most people think
    about corporate governance today.
        Today, BlackRock, Vanguard, and State Street effectively
    own more than 20 percent of most large corporations and they
    cast about 25 percent of the votes in elections for directors.
        So why do they have this power? Because investors have been
    shifting their money into index funds, and the Big Three have a
    90 percent market share in U.S. stock index funds. And, as Dr.
    Prins said, the manager of an investment fund gets to cast the
    votes, not the investors in that fund, even though it is the
    investors whose money is at stake.
        Now corporate executives tend to listen to the view of
    their largest shareholders, in part because those shareholders
    can vote them out of their jobs. So this means that a handful
    of executives, at a handful of asset management companies, have
    influence over virtually every large company.
        So the next question is what are they doing with that
    power, and different observers have identified at least four
    different problems. Some people think that the Big Three
    actually do not provide enough oversight of corporate directors
    and executives, and the reason is that all the funds that track
    the same index--so, for example, all of the S&P 500 index
    funds--get the same returns. So if you manage an index fund you
    have no incentive to pressure companies to do anything really.
    So that is number one.
        Number two is that some people, including Senators Toomey
    and Johnson, think that Larry Fink, the CEO of BlackRock, is
    using his company's power to push his personal political agenda
    on the corporate sector. Fink has recently been very outspoken
    about the need for corporations to take climate risk seriously.
        Number three. Some people think, on the contrary, that the
    Big Three, despite Larry Fink's statements, are not doing
    enough about climate risks and other environmental, social, and
    governance concerns.
        Number four, and perhaps most concerning, some scholars
    think that large asset managers are facilitating collusion
    between companies in the same industry. The idea is that if you
    own 10 percent of every airline, for example, you want them to
    collude instead of competing with each other, and economic
    studies have found that greater common ownership by asset
    managers leads to higher prices in both the airline and the
    banking industries.
        Now not all of these criticisms can be true at the same
    time in the same company, but they point to the problems that
    the economic power of large asset management firms creates. Now
    I do not want to overstate the point. Larry Fink today cannot
    give orders to corporate CEOs and expect them to be followed
    100 percent of the time, but his power is increasing every
    year.
        So, in summary, I would say this is not really shareholder
    capitalism anymore. This is financial intermediary capitalism,
    where the decisions are made by companies that accumulated
    other people's money, and they accumulated it because they are
    very good at administering and selling low-cost index funds.
    And I doubt that this is the best way to allocate power over
    our economy.
        So let us take the example of climate change. Again, some
    people think that BlackRock should not do anything about
    climate change. Others think it is doing too little. But I
    think both sides should agree that how our nation's
    corporations respond to this challenge should not depend on the
    personal opinions of one man.
        Just this week, Charlie Munger, who was Warren Buffett's
    lieutenant for decades, said, and I quote, ``We have a new
    bunch of emperors and they are the people who vote the shares
    in the index funds. I think the world of Larry Fink, but I am
    not sure I want him to be my emperor.''
        Thank you very much.
        [The prepared statement of Mr. Kwak appears on page 110]
        Chairman Sanders. Thank you very much, Mr. Kwak.
        Our next panelist is Douglas Holtz-Eakin, who is the
    President of the American Action Forum. Mr. Holtz-Eakin, thanks
    a lot for being with us.

      STATEMENT OF DOUGLAS HOLTZ-EAKIN, PH.D., PRESIDENT, AMERICAN
                              ACTION FORUM

        Mr. Holtz-Eakin. Well thank you, Chairman Sanders, Ranking
    Member Braun, and members of the Committee for the privilege of
    being here today. Let me make a couple of points very quickly
    and then I look forward to answering your questions.
        The first point is to just remind us that it is useful in
    these circumstances to step back from the particulars of this
    case and remember that financial markets have a very important
    role to play in the U.S. economy. Financial markets are the
    mechanism by which we take the savings of each household, pool
    them together, and provide the capital that businesses need to
    start up, to expand, to improve their technologies, and that
    intermediation is a crucial function.
        It is financial markets that allow people to diversify
    their financial holdings, and thus get away from the risk of a
    particular holding. It allows them to mitigate health risks,
    longevity risks, disability risks, all sorts of risk management
    to make their lives more secure and more safe.
        And it is the way by which we separate ownership and
    management. So we can specialize in management while having the
    owners control the shares in publicly traded companies and
    other arrangements like that.
        And the U.S. has been successful, largely because it has
    the deepest, most liquid, best capital markets on the planet,
    and the beneficiaries of that success have been the American
    households who, from the end of World War II to the Great
    Recession saw the standard of living double every 35 years. And
    you could imagine a family like mine, where my father came out
    of the Navy and went to work for the steel industry, and in
    those 35 years rose into the middle class and was very
    successful.
        Point number two is within those financial markets there
    are many different business models. We have banks. We have
    insurance companies. We have mutual funds. We have pension
    funds. We have a myriad of business models that are competing
    to provide those services that households value in the
    financial area. And private equity is one of those business
    models, and at least, to my eye, the rule that one ought to
    adhere to is that policies, whether they be tax or legal or
    regulatory, bankruptcy, those policies should tilt the playing
    field as little as possible among those business models so that
    they have to deliver on the basis of their performance, not on
    having an advantage in a policy arena.
        Private equity does appear to be successful in that
    competition. In my written testimony we have a variety of
    measures of the success--10-year average rate of return at 12.3
    percent in the decade leading up to 2020, 11.7 million workers.
        And point three, they are probably more successful than
    that because the basic model is to take entities that need
    restructuring, that are performing below average, and delivery
    higher returns. And so getting the market rate of return is
    actually quite an accomplishment in those circumstances. So I
    think we have reason to believe the private equity model is a
    successful model on the whole and across the economy.
        And so my last point is simply that particular policies,
    whether it is legislation like Senator Warren's Stop Wall
    Street Looting Act, which contains provisions that are targeted
    on just one entity--in this case, 100 percent tax on fees from
    portfolio companies and increasing the tax on carried
    interests, limited interest deductibility, restriction on
    dividends, special treatment of workers in bankruptcy, special
    liability rules for primary equity--those kinds of provisions
    are not going to satisfy the neutrality dictum and are not the
    way I think Congress ought to pursue whatever issues do arise.
        I would prefer instead, as Senator Warner mentioned,
    rethinking bankruptcy law as a whole if there needs to be a
    higher priority placed on workers, health insurance, pensions,
    whatever it might be. Do that in a neutral fashion across all
    entities and do not discriminate against a single business
    model.
        But I thank you for the chance to be here today, and I look
    forward to answering your questions.
        [The prepared statement of Mr. Holtz-Eakin appears on page
    119]
        Chairman Sanders. Thank you very much.
        Duncan Wood is a Vice President for Strategy and New
    Initiatives at the Wilson Center. Dr. Wood, thanks for being
    with us.

    STATEMENT OF DUNCAN WOOD, PH.D., VICE PRESIDENT FOR STRATEGY &
                   NEW INITIATIVES, THE WILSON CENTER

        Mr. Wood. Thank you so much, Chairman Sanders, Ranking
    Member Braun, distinguished Committee members. My remarks today
    will focus on the challenges facing the critical minerals
    supply chain and the need for concerted action by government
    and the private sector to address a significant and growing
    deficit in the availability of these resources as the global
    energy transition brings a dramatic increase in demand.
        In the summer of last year, the Wilson Center convened a
    Critical Minerals Working Group, made up of stakeholders from
    industry, academia and civil society, to examine the
    vulnerabilities that exist in the supply chain and to discuss
    how the private sector and government can address them. The
    working group produced a report, titled ``The Mosaic
    Approach,'' which identified three main vulnerabilities.
        The first, namely to meet its climate goals, the United
    States must face rapidly and dramatically rising demand for
    critical minerals while constrained by chronic underinvestment
    in mining, processing, infrastructure, and human capital.
    Current trends show that demand for critical minerals outpaces
    that of supply and will continue to rise, particularly
    considering the key role the critical minerals will play in the
    clean energy transition.
        An International Energy Agency (IEA) assessment found that
    to reach the Paris Agreement goals of less than a 2 degrees
    Celsius rise in global temperature clean energy technologies
    would demand four times the current mineral input by the year
    2040. The IEA foresees mineral demand specifically for electric
    vehicles and grid storage for EV batteries to increase by at
    least 30 times by 2040.
        The second challenge the United States faces is from China,
    intense competition from China for access to critical minerals,
    and we must recognize the intense geographic concentration of
    both the extractive and processing activities for critical
    minerals. China's dominant position in the supply chain stems
    not only from its ownership and control of critical minerals
    mines, but also processing facilities.
        In the maps I have included in my written testimony you can
    observe the impressive geographical concentration of resources
    and processing facilities that leaves the U.S. at a huge
    geopolitical and competitive disadvantage. China has assumed a
    dominant position in the processing of cobalt, around 50
    percent of global processing capacity; rare earth elements,
    around 80 percent; and lithium, around 50 percent, all of which
    are essential minerals for the clean energy transition. The
    United States must invest in both extraction and processing to
    meet the challenge.
        Third, there is a governance challenge that impacts the
    first two vulnerabilities in which mining firms from the United
    States, unlike their Chinese counterparts, must adhere to
    justifiably stringent compliance measures in the areas of
    environment, society and transparency disclosure regulations,
    regardless of whether they are operating domestically or
    internationally. Permitting requirements on U.S. mining firms
    place them at a competitive disadvantage compared to Chinese
    competitors and provide a strong disincentive for developing
    resources within the United States.
        As this challenge becomes clear, it is also obvious that
    the United States has fallen behind in the extractive
    industries. In part, this is because we have not invested
    enough in mapping our resources, in part because we rely too
    heavily on sourcing from other countries, and in part because
    it is overly costly and time-consuming to develop these
    essential mineral resources here in the U.S.
        One of the biggest impediments to the development of new
    mineral resources here is to be seen in the permitting process.
    Whereas permitting in Australia and Canada, countries that have
    suitably high standards, typically takes between 2 to 3 years
    for a new mine, here in the U.S. it takes between 7 to 10
    years, with companies subject to 30 or more local, state, and
    Federal regulations and programs.
        It is important to emphasize here that I am not suggesting
    a lowering of standards. Strong environmental protections
    remain a priority for mining companies, in part due to the
    demands of investors, in part due to the demands of end users
    to green the value chain, and in part due to increased public
    oversight.
        Rather than lowering standards, it is the regulatory and
    permitting process that requires review. Regulatory innovation
    that takes firm competitiveness and national geopolitical and
    climate objectives into consideration is desperately needed to
    provide more transparent timelines for permitting, clearly
    define the roles of different agencies to avoid regulatory
    duplication, and to allow for shared responsibility between
    regulators and the firms they regulate.
        Alongside that revised permitting process the United States
    must seek to internationalize these higher standards. An effort
    on the part of the U.S. government, alongside its partners, to
    raise Environmental and Social Governance (ESG) standards
    around the world will help to protect the environment and level
    the playing field to help U.S. firms compete domestically and
    globally.
        In conclusion, as America moves towards a clean energy
    future, with massive investment in renewable energy and
    electrification of the vehicle fleet, we must address a deeply
    concerning reality. The lack of investment here in critical
    minerals extraction and processing leaves the country
    vulnerable to supply shortages and interruptions in the
    production of batteries, vehicles, and advanced technologies.
    Whereas countries such as China have invested heavily, the
    United States has for too long neglected its own natural
    endowments and has failed to engage with foreign allies and
    partners to guarantee supply.
        The clean energy transition cannot happen without critical
    minerals. To secure that supply chain, the U.S. government must
    work with the extractive industries at home and abroad to
    facilitate responsible and environmentally conscious extraction
    in as efficient a manner as possible.
        Many thanks.
        [The prepared statement of Mr. Wood appears on page 123]
        Chairman Sanders. Dr. Wood, thank you very much.
        Senator Braun has another appointment and has asked to go
    first. Senator Braun.
        Senator Braun. Thank you, Mr. Chairman. Mr. Wood, I just
    heard what you said, and earlier I was talking to Mr. Roberts
    about coal. Of course, oil and gas would be theretoo, where, to
    me, especially in that case, there is a difference between your
    long-term goals and what you need to do in the present if we
    were energy independent. Now you are asking OPEC, you know, to
    pump more.
        So here, though, it seems to me to be just a blatant
    contraction, when you are pushing electric vehicles, and a lot
    of the things that lower greenhouse gasses and where critical
    minerals are a component of all that.
        Do you think there is an inherent contradiction coming from
    the Biden administration, and do you think that in the short
    time that we need to get there with supply chains and 18 find
    these critical minerals, in many cases in the U.S., is the
    Administration helping or hurting?
        Mr. Wood. Thank you for the question. My take on this is
    that we have set an ambitious goal. Right now we are not in a
    position to be able to reach that goal. Many of the critical
    minerals that are required for the energy transition are to be
    found here in the United States, but we have not developed
    those resources for a number of reasons.
        A lot of the critical minerals are not found here in the
    United States, and that means that we do have to engage with
    allies and partners overseas to make that happen. And that is
    why I keep coming back to the point. This is not something that
    government can do alone. This is not something that industry
    can do alone. There does have to be a much more collaborative
    approach to identify where the resources are, to identify the
    impediments to their extraction, and to try to make sure that
    these are aligned with United States' geopolitical and
    competitiveness goals.
        At the current point in time, I see a future where we have
    built factories that will produce an electric vehicle fleet but
    we simply do not have the critical minerals that we need for
    the battery technology to make those electric vehicles
    functional.
        Today we live in a world where we look out and we see
    massive inflation of car prices because of a lack of
    semiconductors. In the future we might be in a similar
    situation where we simply do not have enough lithium coming
    through to U.S. automobile manufacturers. The consequences of
    that are going to be massive unemployment, massive inflation,
    and really a failure to meet our ambitious goals.
        Senator Braun. Thank you. And I would suggest to President
    Biden that if you are going to put the rhetoric out there that
    you want to convert electric vehicles for those critical
    minerals that lay within our own country you cannot have your
    cake and eat it too. And you at least need to make sure we open
    that up if we are going to go there with policy and then try to
    get the relationships built with other countries where we do
    not have them here.
        Thank you. Thank you, Mr. Chairman.
        Chairman Sanders. Thank you, Senator Braun.
        Let me go virtual here to Dr. Prins. Dr. Prins, tell me
    what I am missing when I think that the American people should
    be very worried when three huge Wall Street investment firms
    control assets of $22 trillion, nearly the entire annual GDP of
    the United States. Are you concerned that this extraordinary
    concentration of ownership might be a danger to our economy,
    and, in fact, with so much power in so few hands a danger to
    democratic society? Dr. Prins.
        Ms. Prins. Yes I am--and here is why. Any time the
    disconnect between the American people's accessibility to money
    and power relative to that of mega-financial institutions
    grows, we lost a piece of our democratic society. In this
    particular case, what we are seeing is a precipice of a highly
    concentrated amount of cheap capital. So this is not even
    because of the leveraging of capital that is coming through,
    say, the Federal Reserve or other elements externally. This is
    people's capital. It is institutional capital, and it can be
    used, and has been used, to affect corporate decisions.
        And as Mr. Kwak mentioned, it has also been used to
    effectively consolidate the decisions of entire industries,
    whether explicitly or implicitly. The problem with that is when
    you have so much concentration of power and capital in the
    hands of such a small amount of asset management companies,
    there is too much potential for systemic risk because of that
    concentration to default on the entire market system as well
    as, therefore, on the economy. And it is always the people in
    the economy that are most hurt when market disruptions or
    crises happen, because it impacts them the most.
        And secondarily, if people believe that they are invested,
    for example, through their retirement funds, in exchange-traded
    funds within these large, concentrated, few players have
    amassed, and believe that, therefore, they are investing in
    companies that they perchance have some influence over, even to
    see the ability to proxy vote, to be real shareholders in these
    companies they are mistaken in that.
        So what these three companies have done, they have taken
    away power from anyone who has invested in the markets at a
    smaller level and they have concentrated power to influence
    mostly all of the companies in the country.
        Chairman Sanders. Okay. Thank you very much. Let me ask Mr.
    Kwak a question, and that is, given that Wall Street money
    managers and private equity firms are nearly entirely
    unregulated, what ideas do you have for congressional action?
        Mr. Kwak. Thank you for the question, Senator. I think
    there are two types of issues that have been raised regarding
    private equity firms. One is essentially what Senator Warren
    talked about, which is what private equity firms do to their
    portfolio companies, such as causing the company to take on a
    lot of debt, taking the cash out as a special dividend to
    themselves, and so on. I think that the act introduced by
    Senator Warren would be a very good first step.
        The second issue with private equity firms is that a lot of
    people think that private equity firms are not entirely above
    board with the investors in private equity funds. That is a
    topic which the Securities and Exchange Commission (SEC)
    recently promulgated a proposed rule to address. The issue here
    is, for example, private equity firms may charge fees to the
    fund, meaning that they have to be paid by all the investors,
    when they should be absorbing those fees because the private
    equity firms are paid a management fee by the private equity
    fund. I know that is a little complicated, but essentially it
    is possible that private equity firms are playing a little bit
    fast and loose with their investors' money.
        Turning to the large asset management firms, I think the
    issue that Dr. Prins and I have been discussing is the
    concentration of voting power in the hands of these companies.
    Various scholars have proposed a number of different solutions.
    I will mention a few, and I will try to be brief.
        Some legal scholars think that because of the competition
    effects, the anti-competitive effects that have been noticed,
    this kind of accumulation of shares in all of the leading
    companies in one industry could be prosecuted under the Clayton
    Act. So that is one possibility.
        Some people have suggested that index funds should be
    limited in the amount that they can own of any individual
    company, or that limit would have to be applied at the fund
    family level. So for example, there would be a limit on how
    much BlackRock's index funds could own of any company.
        The last suggestion I will mention is one that Dr. Prins
    has also mentioned, which is essentially allowing the
    shareholders in the funds to vote the shares instead of having
    the fund manager vote the shares. The issue there is that we
    would have to have a mechanism for those shareholders to
    express their preferences about how they want their shares to
    be voted. I think that could be done, and I will spare you the
    details. Thank you.
        Chairman Sanders. Okay. Thank you very much. Senator
    Padilla.
        Senator Padilla. Thank you, Mr. Chairman, for holding this
    hearing to put the spotlight on how corporate greed is, in
    critical sectors especially, leading to higher prices for
    consumers and harming workers and families.
        There are a number of issues I would like to raise and ask
    questions about, but let me set the stage by also acknowledging
    that the American economy has come roaring back. With the
    greatest year of job growth in our nation's history, in 2021,
    corporate greed still casts a large shadow over our recovery.
        Mr. Chairman, as you know, Angela and I are raising three
    boys, three growing boys, and so I can assure you I have seen
    first-hand how price increases are affecting families, families
    across the country, whether that is at the gas pump, at the
    grocery store, when it comes to paying for childcare, at the
    pharmacy, and elsewhere.
        These price increases are not just because of rising costs
    or small businesses just trying to get by. Many corporations
    are posting record profits. Estimates show that the earnings of
    S&P 500 companies rose nearly 50 percent over the past year,
    while they cited increased costs to justify increased prices
    for American families. It should be unthinkable that during a
    global health pandemic, while so many working families were
    struggling to get by, that billionaires got richer, but they
    did.
        So as we continue our recovery we need to both upgrade our
    nation's infrastructure and pass the President's plan to reduce
    the cost of essentials, like prescription drugs, health care,
    childcare, housing, and more. We must also ensure that wealthy
    corporations are not just using the pandemic and the supply
    chain as excuses to exploit consumers and increase their
    profits. So I am proud to be part of this Committee's efforts
    to fight for solutions that help us build a more equitable,
    inclusive economy and hold corporate interests accountable.
        The first issue I want to ask about deals with the
    agricultural industry and the dynamics of consolidation. Not
    only have mergers and acquisitions changed the landscape of the
    agricultural industry but financial investments, including from
    equity-related funds in this sector has grown significantly in
    recent years. At the end of 2016, the top five asset management
    firms owned at least 10 percent, upwards of 30 percent of the
    shares of the top firms in the agricultural and food sector.
        Given this common ownership across the industry, these
    firms have little incentive to bolster competition and
    innovation between individual firms. Instead, they can
    encourage inexplicable price increases to make even more
    profits across the entire sector, and the end result is higher
    prices at the grocery store for American families.
        Mr. Kwak, why is addressing the common ownership of
    companies important to keeping down the cost of food for
    American families?
        Mr. Kwak. Thank you for the question, Senator. You are
    absolutely right that the food sector is highly concentrated.
    For example, in poultry, hog, and beef processing I believe the
    top four companies in each of those industries has more than 50
    percent and up to 85 percent of the market share. The same is
    true in agricultural inputs, such as seeds, herbicides, and
    pesticides.
        And to give you one example, in the agricultural input
    markets the largest companies are Bayer, which bought Monsanto,
    BASF, Corteva, and Syngenta. Syngenta is owned by a Chinese
    company. BlackRock is the largest shareholder of Bayer and
    BASF, and Corteva's three largest shareholders are Vanguard,
    BlackRock, and State Street.
        I am not aware of economic research that has been done
    specifically on this question and this industry, but I think it
    is very possible that what is happening is what has been found
    to be true in banking and airlines, which is that the CEOs of
    those companies know who their largest shareholders are, and
    they know that their largest shareholders will benefit from
    anti-competitive behavior, and therefore they engage in that
    anti-competitive behavior.
        So I cannot prove it but I think that the large ownership
    stakes of these asset management firms could very well be
    leading to higher prices in the food sector.
        Senator Padilla. Thank you, Mr. Kwak. Clearly more research
    to be done in this area.
        Mr. Chair, let me shift for a minute from talking about
    putting food on the table to those who give us food for
    thought. Preserving local journalism is important to keeping
    Americans informed about what is going on in their communities,
    encouraging civic engagement, and countering today's rampant
    disinformation campaigns, as well as the dangerous spread of
    misinformation.
        Unfortunately, in regions across the country, private
    equity firms have bought newspapers with no intention of
    ensuring long-term stability. Instead, we see instance after
    instance of these firms gutting newsrooms to maximize short-
    term profits. And I will give you one of many, many examples. A
    hedge fund bought the Vallejo, California's Times-Herald
    newspaper. As soon as that happened, the number of newsroom
    staff was slashed, the remaining staff's ability to cover and
    investigate local stories obviously dwindled, and its final
    reporter was fired after criticizing the extreme cost-cutting
    measures.
        These types of acquisitions have contributed to the decline
    in newspaper newsroom employment by 57 percent since 2008,
    leaving more than 3 million Americans without access to a local
    paper.
        So the question is for Dr. Prins. Dr. Prins, how can we
    ensure that corporations are held accountable for gutting
    essential American institutions like our newspapers?
        Ms. Prins. Thank you, Senator. That is an excellent
    question. All of the points that you have made in your
    statement related to this question are very important to
    answering it.
        First of all, we need to make sure--and this is largely a
    private equity-driven execution of journalism in terms of the
    takeover patterns, and as you mentioned, the short-term gain
    interest versus the longer-term information outflow or
    democratic journalism interest. That is not the point of what
    private equity institutions do. They want short-term
    turnaround.
        And so in the field of journalism, or really even
    agriculture, the idea is we need to restrict the ability of
    these sort of hits on a concentration, above say a certain
    percentage, in those industries, whether it is related to
    journalism, whether it is related to agriculture, however it
    winds down on the different industry levels. Because otherwise
    we basically open the field to the sense of capital only
    striving to really destroy rather than to build up. Certain
    institutions like journalism, as well as certain businesses and
    sectors like agriculture that, you know, work towards all of
    the American people in terms of if we do not concentrate them
    and get rid of the competition within them, then we can have a
    better price competitive nature and that will reduce prices.
        So I think it is all connected to reducing the influence of
    that private equity sector.
        Senator Padilla. Thank you very much. Thank you, Mr. Chair.
        Chairman Sanders. Senator Padilla, thank you for your
    excellent questions. And let me thank each of our witnesses for
    appearing before the Committee today. Their full statements
    will be included in the record. As information for all
    Senators, questions for the record are due by 12 noon tomorrow,
    with signed hard copies delivered to the Committee clerk in
    Dirksen 624. Email copies will also be accepted. Under our
    rules, each of our witnesses will have seven days from receipt
    of our questions to respond with answers.
        With no further business before the Committee, this hearing
    is adjourned, and I thank everybody for attending. Thank you.
        [Whereupon, at 12:55 p.m., the hearing was adjourned.]

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