FM Talk 1065 Podcasts
State Auditor Andrew Sorrell - Jeff Poor Show - Tuesday 8-06-24
[Music] Welcome back to the Jeff Porchaux on FM Talk 106-5. Once again, I am not Jeff Porch, my name is Craig Monger with 18-19 news. Text line is open 2513430106, and as promised, we have up our state auditor Andrew Sorrell. Now, like I said before, I'm going to keep repeating this, that I first got to know Mr. Sorrell whenever he was in the Alabama House of Representatives and ever since then, every time I talk to him or about him to someone else, I learn some new interesting, cool thing that he's doing. He is a pretty darn close to a Renaissance man, he has his hands and a lot of pies. And most recently, I found out that Mr. Sorrell was elected to a leadership position in something called the State Financial Officers Foundation. And he is the auditor at large for this national organization, and we want to have him on to talk about it. I was unfamiliar with the SFOF, and so I wanted to learn a bit more, because what I did learn, I liked. So, Andrew Sorrell, how are you doing today? Craig, I'm doing well, and appreciate you having me on to talk about SFOF, as I call it, the State Financial Officers Foundation. It's such an important group. And, you know, 10 years ago, all of these positions were not this politicized. Your auditors, your treasurers, you know, your comptroller's. These positions were thought to be more administrative, and they weren't so politicized, but everything is politicized in today's environment. And the State Financial Officers Foundation has to push back and fight against liberal agendas, the woke agendas that are infiltrating, even our money at the state level, our money management. And believe it or not, there is a big difference in how Republicans manage your money and how Democrats manage your money. Yeah, and I was looking at the SFOF. They provide data, and they talk about how skeptical the general public is of elected officials. However, it seems like state auditors, state treasurers of people of those ilk, they're trusted nearly 65% of the time over their governors or members of Congress. Is that more of a -- is that a daunting statistic to know that you have a higher level of trust and that you have to maintain that? It kind of increases the way to their responsibility, knowing that the public does trust in you and in that position. And I think it speaks to the good work that the auditors and treasurers and controllers are doing nationwide on behalf of the general public. They feel like they can trust that their money is being handled responsibly, unlike Congress, who handles money very irresponsibly and has a 12% approval rating. So, yes, I think it does increase the way the responsibility. Yeah, well, tell me a little bit about what the SFOF takes on. Like I said, I was unfamiliar with them, and then whenever I was writing up a story about you being elected to your position, I found some very cool topics and some very cool priorities. So, obviously, tell me about what they're doing, what their main focus is. Excuse me, their main focus is and how they're addressing that on the federal and state levels. All right, well, let me start with a story. When I won my primary, my Republican primary runoff or state auditor, I did not have a Democrat running against me in the fall. So, we knew I was going to win the race. It was just a matter of waiting for the general election day to come. At some point that fall, one of my friends at Club for Growth connected me with a man named Derek Kreifel. Now, Derek is the CEO of the State Financial Officer Foundation. He helped get this thing started, and he still runs it today. Now, of course, we have elected officers, but he is the guy doing the day-to-day operations, because we're all serving the public in our elected positions. And I was also, as you are, I was unfamiliar with SFOF. I had no idea I was going to join the thing if I got elected to state auditor. But upon recommendation from one of my friends at Club for Growth, I spoke to Derek, and I said, "Well, what is it that your organization actually does? Like, sell me on why I don't need to be a part of another organization. You know, just have my name on some list. Does your organization do anything useful?" And he started telling me about the fights that they're taking on. Like, for instance, standing up against BlackRock. If BlackRock is going to start using ESG standards for their investments and hurting investment returns for retirees in Alabama and other states, then maybe the states need to band together and start divesting themselves from BlackRock investment. And the Safe Financial Officer Foundation has been very successful doing that. And we've divested something like $13 billion to come out of BlackRock as a result of conservative state treasures around the country. And even, like, there's some Texas Board of Education that has billions of dollars that they manage. And they pulled $6 billion from BlackRock. And it sent a really strong message to BlackRock. They need to stop investing Woke, and then you start investing for the best returns. So it immediately caught my interest, because what we're talking about here is fiduciary duty. You're supposed to manage the public's money in a way that gets them the maximum return for the lowest amount of risk. You're not supposed to politicize their money. You're not supposed to say, well, we're going to invest it in green energy, even though we know that has a terrible return. Well, no, this is people's retirements you're talking about. Invest in things that are going to get them the best return, not, you know, not their corporate board diversity and all these other measures that don't really matter to their bottom line. So I agreed to join the organization. And once I got in, one of the things I found out that they did very successfully is they put together these nationwide letters, and we have 37 different state financial officers, all Republican in this organization. And let me tell you, when we get 30 plus state financial officers signing on to a letter to Congress, to the president, to, you know, somebody that want to be like Fannie Mae, Freddie Mac, those type of organizations, first of all, it always gets national press. We always get a big news story out of it. And it's been shown to be effective at getting these entities to change the direction on where they're going. Some of the things we speak out on unsuccessfully, but it still needs to be said. For instance, the Biden administration rule change on how mortgages are handled. So you may remember this, Craig, it's about probably a little over a year ago. The Biden administration said, hey, what would be smart is that we took people with good credit and had them subsidize people with bad credit. So people with bad credit can afford to buy a house. So it's socialism and housing purchases. And we came together and said, no, it's dumb decisions like this. It led to the housing bubble bursting back in 2007. The government started sticking their nose in the mortgage business too much, saying who had to be loaned to instead of making loans based on who could actually afford to repay. So we spoke out against that. So that's just a few quick examples of some of the fight the Financial Officers Foundation has taken on. Yeah, and it seems like the sort of climate initiatives that are being pushed by a lot of these large corporations, am I wrong in assuming that that seems to be coming downstream from the federal government as far as the incentives that they give these giant corporations like Black Rock multinationals? Am I correct in assuming that that flows downstream from the feds or is it the other way around? I do think it flows downstream from the feds. But yeah, possibly a little bit both ways. It's hard. Some of these big companies that are going woke with their ESG type investing, they're doing so almost reluctantly. They're being scored by these scoring firms that tell asset managers, should you invest your money in ExxonMobil, for instance? Well, ExxonMobil is not a quote environmentally friendly company. It's what the liberals would say because they drill oil. So we are going to divest from ExxonMobil's stock with billions of dollars of pension fund dollars, unless you get some more minorities on your board, unless you commit to net zero emissions, which would basically mean you just have to shut the entire company down, right? That's ultimately what they want is just to destroy ExxonMobil. And even though ExxonMobil had a record setting profit last year, they came up with a shareholder proposal that was fire the CEO on the entire board. That was a proposal that was put forward by the New York Pension Fund Association. I think the Canadian Pension Fund, which is very liberal, owned a bunch of stock in ExxonMobil. So they put these shareholder resolutions forward. Hey, our company just made more money than ever. Why don't we fire the board and the president? That makes a lot of sense, right? So we came out with a letter. I actually took the lead on this one. I heard this was happening. And I drafted the letter. We got it sent around. And I forget how many 20 or 30 state financial officers signed on. And thankfully, the entire ExxonMobil board and the president was re-elected. This just happened a couple months ago. But the ExxonMobil CEO was like, man, is there anybody out there who would speak up on behalf of us? Because this is just insane what's going on right now in our financial market. And thankfully, the state financial officers' foundation was what he found when he Googled. And apparently Alabama came up first. My name showed up because, you know, we're A's in the alphabet. My office got contacted, and that's how I got involved. So just another illustration of the sites that we take on. But these companies feel so much pressure to commit to the environmental, social, and governance standards from these scoring companies, or these pension funds won't buy their stock. So some of these companies are reluctantly kind of backed into a corner, and they feel like they have to do it. We give them an excuse to say, well, we're getting pressure from both sides, so we're just going to do nothing, which is what we want. We don't want really politics in the boardroom. We want the companies focused on how do we earn the highest return for a shareholder. That's what they're supposed to be doing. That's the purpose of a corporation is to earn a return for the shareholders not to be a political activist. So how is that a play out as far as, you know, obviously more conservative governments, more conservative state governments. They're obviously going to want to put, they're going to want to put, like you said, pension plans and things of that ilk in various ways. In various successful businesses, businesses that will see a return, corporations that will see a return. Is it important to you, I guess, personally and to those in the SFOF to really make sure that the money is going to causes that are not necessarily conservative, but that aren't completely anti-American and anti what the American people believe? So this is an interesting question. So what we don't want to become is just the opposite of what our enemies are doing. So we don't want to pressure asset managers to only buy, quote, conservative company stock. Like, okay, we're all going to go buy stock in Twitter or X, whatever they call it now, because Elon Musk owns it. And Elon Musk is supporting Trump. So we're all going to go buy Twitter stock. That's not what we're pushing for. What we're pushing for is a return to standard of fiduciary duty, which says, "Burn the highest risk-adjusted return you can for the people whose money you are managing." So that might involve purchasing a solar project, okay, if it's actually profitable. Now, we're not for all the subsidies and everything that solar gets, but if a solar company is making a lot of profit, there's no reason that we shouldn't buy into that. We're not going to boycott them just because they happen to be solar. The same as we don't want the left boycotting ExxonMobil because they happen to be oil. So does that make sense? We're not trying to be the opposite of what our enemies are doing. We're just trying to get back to, we're going to judge a company based on its fundamentals. It's earning potential. It's present-day earnings and its future earnings potential. We're not going to judge it on their ESG score. Gotcha, gotcha. Now, obviously you would know about this more so than I, but then the market is seriously seriously having some issues right now and obviously that affects everyone across the board, but especially states that have investments in certain corporations, certain areas. What does, this doesn't have anything to do with the SFOF, but what does the current market troubles, what kind of effect does that have on state treasuries, state monies, and the investments that they have with retirement funds and things like that? Yeah, it does have an effect. So I'll give you an example. As Alabama State Auditor, I sort of want to call the Penny Trust Fund board, we have, I think we have something like $14 or $15 million we handle on behalf of the public, and that money gets split between education and public health, I believe. We split whatever income we generate in a year. We split off 50% to each and pay it out. So we have annual board meetings and everything. Well, one of the things we did in our last board meeting was we said, "Hey, interest rates are really high right now." So we bought some T-bills on behalf of the public and locked in a good interest rate for a couple of years. Well, with interest rates dropping, the value of those bonds should increase because bond prices move opposite of the interest rates, of course. So when the market goes down, the stock market goes down, there is a fleeing to bonds sometimes, which can dramatically, and I gave you an example of $14 million fund, imagine a $14 billion fund that had a large share of bonds. It could really benefit that portfolio, but the inverse is also true. If the fund owns a whole lot of stock, it's going to hurt them. But overall, I think the Fed waited too late to pivot on their economic policy. We were starting to see cracks in the economy, you know, 30, 60 days ago. I know the stock market was running doing all-time highs, but there were some warning signs, and I think they missed them. And part of it was just bad luck because the Fed comes out last week and says, "We're going to leave interest rates unchanged. We're looking at a 25 basis point cut in September." And then what happens? The end of the week, a terrible jobs number comes out, and the stock market just collapses. There aren't a thousand points yesterday. Japan's was down 12% in a single day, they're stocking the index. So there's real jitters. There's a real feeling among investors that the Fed waited too long, and now we're not going to get that soft landing that we were promised by the Fed. And there's a lot of people talking now about how it doesn't need to be a 25 basis point cut in September. It needs to be a 50. So I don't have any inside knowledge on what the Fed's going to do. In my personal opinion, I think they waited one meeting too late to begin pivoting on their economic policy. Well, we only have a few minutes here left, and so obviously, like I said, you wear mini hats, you're prominent in the Alabama GOP. I wanted to get your thoughts real quick before I let you go on the choice of Kamala Harris to pick Tim Waltz as a running mate. Yeah, I know very little about Tim Waltz, but what I do know is he's one of the most liberal picks he could have possibly made. And this is the guy that said one man's socialism is another man's neighborliness or something to that effect. I mean, that's how radical this guy is. He's saying basically socialism is just being neighborly. No, it's not. It's a terrible economic system that oppresses millions of people worldwide. I think it's interesting she picked somebody from kind of the Midwest area probably to counter the JD Vance pick by Trump. Everybody knows how important that Pennsylvania, Ohio, Wisconsin, Michigan area is. She picked somebody kind of from that area of the country. So, I mean, that's really, I don't have a very limited knowledge on him. I know he's in Congress for about 12 years, had a pretty liberal voting record there. A little bit of a surprise. She didn't go with somebody more like maybe a Gavin Newsom or something like that. I don't, this pick kind of took me a little bit by surprise to be quite honest with you. Oh, yeah, I know everyone, including myself, is expecting Shapiro, but I too didn't know too much about this guy. Well, Mr. State Auditor, thank you again so much for coming on. And if people want to find out more about you, what should they go? Well, they can go to my Facebook page, Andrew Serrell, for State Auditor, that's still up. And of course, they can always contact me directly on Facebook or reach out to my office. All right, thank you so much again. I hope you enjoy the rest of your day. Thank you. All right, this is FM Talk 106-5, the Jeff Porschow. Be right back. As I step down to that Cadillac.