Hidden Nook

"Because in Cyberspace, no one can hear you scream."

Saturday, January 22, 2005

Schwab supports reform...could be good.

[Media Source*]

It seems that Charles Schwab supports the idea of private accounts.
Charles Schwab, the pioneer in discount stock trading, long has supported the idea of diverting a share of Social Security taxes into private investment accounts.

Schwab endorsed a book about the subject in 1999. His San Francisco-based company is helping to fund a group that is lobbying Congress for private accounts. He also has written newspaper op-ed pieces calling for more retirement savings options that would "reduce the dependence on government assistance."

Despite the fact of him publicly supporting reform that would potentially help millions of Americans, he has decided not to further comment on the issue. Where are the financial hero's when you need them? Are there any left? :(

It seems that the AFL-CIO (probably the largest liberal union force in America) is vehemetly opposed to the idea.
Powerful groups, including the AFL-CIO and AARP, have bashed the idea of privatization, saying it would shred the retirement safety net and leave more Americans at the mercy of market swings. The AFL-CIO in December sent letters to 46 major financial companies, asking them to renounce the concept of private Social Security accounts.

Facing that kind of reaction, "Most people in the (investment) business are keeping a very low profile," said Greg Valliere, chief strategist at Stanford Washington Research Group, a political-consulting firm. "They don't want to be identified as proponents, because of the potential backlash." Among Wall Street's largest firms - Merrill Lynch, Morgan Stanley, Citigroup Inc. and Prudential Financial Inc. - all declined to comment about the Social Security debate.

But their may be a way to put the financial services industry (whom many see as evil despite the fact that this industry creates wealth for many individuals) in "check" so to speak.
Individual contributions to these private accounts would be limited to $1,000 a year under a recommendation from a Bush-appointed commission in 2001. A key financial-industry concern is that, at least initially, the accounts may be too small to be profitable for most companies to manage, given the paperwork and investor hand-holding that could be required. "None of my members is salivating at the prospect of managing millions of small accounts," said Marc Lackritz, president of the New York-based Securities Industry Association, the brokerage business' chief trade group.

"Once everybody has these accounts, the incentive for Congress to regulate them would be very strong," said Derrick A. Max, executive director of Alliance for Worker Retirement Security, a Washington-based coalition set up by the National Association of Manufacturers to lobby for private accounts.

Although some Chief Exec's believe that Government regulation of these accounts (which can be slow and annoying but price to pay for a secure future) it would pay off in the long run as they would benefit the original contributor--the worker. And isn't that the most important thing of all? Selah!

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By Darnell Clayton • 10:02 PM • Email Post • •


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