07 October 2013

Op-Ed: Wall Street and the great pension fund heist of the 21st Century

Op-Ed: Wall Street and the great pension fund heist of the 21st Century

We don't give Wall Street interests far enough credit for stealing public money to finance their gambling habits. They've been lusting after public monies for years, and now they're having their way with pension funds. Big time.

In the September issue of Rolling Stone, Matt Taibbi writes about Wall Street's assault on public pension funds in the United States during a time when many states are facing crippling budget deficits. Under the guise of pension reform, states such as Rhode Island are turning over the management of public monies to Wall Street firms. State legislators may be stupid (or politically conniving), but you can probably guess who's getting screwed in this deal.

The question is not why Wall Street is going after pension funds, but how easy could it be? And how much could they steal? The answer to the second question is that there's $2.6 trillion in state pension funds under management, and for all intensive purposes, up for grabs in the United States. The answer to question number one is very easily.

Ever since a gaping loophole in the Employee Retirement Income Security Act of 1974 exempted public pensions from fiduciary oversight and disclosure requirements concerning the financial details of the beneficiary's plan, elected officials were left to control the destinies of public pensions with the best interests of their constituents' in mind. Understandably, that smirk arising from your face like a cynical phoenix from the ashes of the 2007-08 financial crisis is aptly justified. Sure, states were often caught illegally under-funding pensions. A cornucopia of states, counties, and cities even borrowed heavily against their constituents' retirements to finance other budgetary concerns when times were still good and the prospects of repaying, even if delusional by any rational standards, seemed like a wise move to quickly shore up budgets. But when the Great Recession hit, pensions and public servants like teachers and firefighters became the scapegoats of Wall Street interests and their Tea Party bottom feeders in government.

“Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front,” Taibbi writes. “The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.”

Read more: Digital Journal

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