[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                     
          
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                        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.]

          ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

    [Prepared statements and responses to written questions 
submitted for the record follow:]
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