Even as you read this, the very financial whizzes responsible for the subprime fiasco and global credit crisis, just the most recent on a long list of financial screw-ups, are lobbying Congress for permission to buy and manage your pension fund.

“A broad coalition of Wall Street firms, from banks and insurers to hedge funds and private equity firms, are pushing lawmakers to let them buy and manage so-called frozen corporate pension plans, which no longer accept new members but must continue to cover current ones. Of the $2.3 trillion in U.S. corporate pension fund assets, some $500 billion sits in frozen plans, including those of big companies such as IBM, Hewlett-Packard, Verizon, and Alcoa.”

In an UN-surprising move the Treasury Department approved the idea; fortunately the IRS ruled that the plan would require legislative approval (and you thought the IRS wasn’t your friend).

Hilariously, Treasury “offered a blueprint for lawmakers to allow “financially strong entities in well-regulated sectors” to acquire pension plans. Now the debate moves to Congress, which would have to change existing law.”

Knowing who those “financially strong entities” are will really increase your warm and fuzzy feelings—they include Aon Consulting, Citigroup, Morgan Stanley, Prudential Financial, Cerberus Capital Management, and, to raise the level from hilarious to hysterical, consider that “JPMorgan’s newest property, Bear Stearns, was among the first to lobby Congress and regulators. It started last year, just as two of its hedge funds were imploding.”

But your friends on Wall Street are drooling over all the zeros in the potential fees. “…McKinsey & Co. predicts that the assets in frozen plans will more than triple, to $1.7 trillion, by 2012. By taking over frozen plans, Wall Street firms could charge fees based on the total assets, perhaps in line with the standard 1% to 2% levied by many money managers.”

Charles Millard, the current director of the Pension Benefit Guaranty Corp loves the plan, as does Former PBGC Director Bradley D. Belt, a GW Bush appointee and former top aid to John McCain, “who two years ago teamed up with private equity firm Reservoir Capital Group to form Palisades Capital Advisors, a pension advisory firm,” and thinks that the little guys like him should be able to play, too.

As to the thoughts of the opposition, “Critics, including some on Capitol Hill, worry that financial firms won’t always have workers’ best interests at heart…”

Ya think? Well, duh.

And be sure to see what Small Business Bomers has to say about this!

What do you think?

Your comments—priceless

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Image credit: microboy   CC license

This entry was posted on Monday, August 18th, 2008 at 3:30 am and is filed under About Leadership, Ethics, Leading Factors, management, Politics, What Do You Think?. You can follow any responses to this entry through the RSS 2.0 feed.
Tags: Politics, subprime, wall street
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