A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

The so-called 1099 economy, where your workers aren’t actually employees, brings up questions.

1. Is worker welfare a valid consideration in terms of the bottom line?
2. How fair is it to reduce compensation, but maintain publicly that earning power is the same?
3. How ethical is it to encourage workers to take on substantial debt based on those unlikely earnings?

If you answered 1) not really, 2) fine, 3) no problem then you’re in line with Uber management.

…reliably ruthless Uber is in the thick of it. Two “partners” in Uber’s vehicle financing program are under federal investigation, but Uber hasn’t slowed its aggressive marketing campaign to get drivers with bad credit to sign up for loans.

Following in the footprints of the mortgage brokers who sold houses to people who couldn’t afford them, thus creating the subprime housing mess, Uber is aggressively pushing new cars and subprime auto loans to its drivers with bad/no credit.

One comment stood out for its clarity and applicability to Uber and the rest of the 1099 world.

Uber corporate gets venture capital and stock options. Uber drivers get subprime loans. Sound like pretty standard American-style capitalism. –buonragazzo

Sound familiar?

Image credit: HikingArtist

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