CII and the BRT joined forces to oppose the Schumer/Sanders proposal on stock buybacks. But that does not mean they have no concerns about the current rise in buybacks, with a record-setting $1 trillion last year. VEA Vice Chair addressed the CII board this morning and we expect to hear more from them on this subject.
Of course buybacks, like other methods of raising and allocating capital, can be abused, as is the case when companies may attempt to artificially inflate their stock prices in the short term by buying back shares. To avoid such abuses, public companies should have strong corporate governance practices guiding how the decisions about stock buybacks and dividends are made, to ensure they are made with the long-term interests in mind.
By contrast, imposing federal limitations on how companies decide to use their capital would stifle innovation and opportunity in America. Recent proposals to restrict buybacks and dividends, while presumably made with the laudable intent of increasing wages and capital investment, will only make it more difficult to achieve sustained and inclusive economic growth in the United States.