It appears that recently surfacing reports that the White House was planning to stop planned changes to the Thrift Savings Plan’s I Fund were true. A pair of letters sent yesterday by administration officials are a first step in trying to reverse the Federal Retirement Thrift Investment Board’s (FRTIB) planned change to the benchmark index for the I Fund.
Fox Business first reported the action by the White House after it obtained copies of the letters.
The first letter was sent by national security adviser Robert O’Brien and National Economic Council Chair Larry Kudlow to Labor Secretary Eugene Scalia.
In their letter, Kudlow and O’Brien write that the FRTIB is planning the I Fund change “during a time of mounting uncertainty concerning China’s relations with the rest of the world, including the possibility that future sanctions will result from the culpable actions of the Chinese Government with respect to the global spread of the COVlD‐l9 pandemic.”
They call the change to the I Fund “risky and unjustified” and go on in the letter to say that they believe the FRTIB should “cease implementation immediately” for the planned change to the I Fund.
The letter acknowledges that the FRTIB could not have anticipated recent events, namely the situation surrounding the COVID-19 coronavirus, when it made the decision to change the I Fund last November. However, Kudlow and O’Brien wrote that the recent events “have heightened these risks [with changing the I Fund].”
The letter asks for a response from Scalia regarding the FRTIB’s intentions by May 15.
Scalia apparently immediately got onto the case. He sent a second letter to FRTIB chairman Michael Kennedy the same day.
In his letter, Scalia summarizes the positions of O’Brien and Kudlow in their letter and then tells the FRTIB to immediately stop its plans to change the I Fund.
Scalia wrote, “At the direction of President Trump, the Board is to immediately halt all steps associated with investing the I Fund according to the MSCI ACWI ex USA IMI , and to reverse its decision to invest Plan assets on the basis of that international equities index. This now is the only acceptable course, given the concerns expressed by the President’s advisors and the chairs of the SEC and PCAOB, as well, of course, as the President’s own directive to the Board.”
Scalia also noted in the letter that President Trump had nominated three new individuals to serve on the FRTIB board to replace those whose terms had expired.
Scalia wrote, “I also note, with all respect to the many years of service by you and your fellow Board members, that you and the other members serve on expiring terms, and the President last week nominated three replacements. Deferring the MSCI ACWI ex USA IMI investment will enable a newly‐constituted Board, impaneled with the advice and consent of the Senate, to decide what index ‐ if any ‐ should be selected to replace the current I Fund index.”
Copies of each of the letters are included below.
2020-05-11 White House Letter on I Fund Change
2020-05-11 Scalia Letter to FRTIB
