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Financial Industry May Control Retirement Savings In A Clinton Administration


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2016 Oct 19, 2:21am   765 views  1 comment

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"Pay-to-play violations are a cornerstone of the alternative investment market," said former SEC attorney Edward Siedle. "It's often the only way that money managers can get elected officials to evade their fiduciary duty and invest in low-transparency, high-cost, high-risk investments that consistently trail the S&P 500. Any retirement plan that would allow that to happen at the federal level would be insane."

A top Hillary Clinton fundraiser — who may become treasury secretary — has a plan that could turn billions of dollars from payroll taxes into a revenue stream for the financial industry.

While Hillary Clinton has spent the presidential campaign saying as little as possible about her ties to Wall Street, the executive who some observers say could be her Treasury Secretary has been openly promoting a plan to give financial firms control of hundreds of billions of dollars in retirement savings. The executive is Tony James, president of the Blackstone Group.

The investment colossus is most famous in politics for its Republican CEO likening an Obama tax plan to a Nazi invasion. James, though, is a longtime Democrat — and one of Clinton’s top fundraisers. The billionaire sculpted the retirement initiative with a prominent labor economist whose work is supported by another investment mogul who is a big Clinton donor. The proposal has received bipartisan praise from prominent economic thinkers, and James says that Clinton’s top aides are warming to the idea.

It is a plan that proponents say could help millions of Americans — but could also enrich another constituency: the hedge fund and private equity industries that Blackstone dominates and that have donated millions to support Clinton’s presidential bid.

The proposal would require workers and employers to put a percentage of payroll into individual retirement accounts “to be invested well in pooled plans run by professional investment managers,” as James put it. In other words, individual voluntary 401(k)s would be replaced by a single national system, and much of the mandated savings would flow to Wall Street, where companies like Blackstone could earn big fees off the assets. And because of a gap in federal anti-corruption rules, there would be little to prevent the biggest investment contracts from being awarded to the biggest presidential campaign donors.

Rather than funneling the hundreds of billions of dollars of new tax revenue into expanding Social Security benefits, as many Democratic lawmakers have called for, James proposed something different: A decade after George W. Bush’s failed attempt to divert Social Security revenue into private retirement accounts, the Blackstone president outlined a plan to create individual retirement accounts, some of whose assets would be managed by private financial firms.

Chris Tobe, a Democrat who advises institutional investors and who served on Kentucky’s pension board, put it just as bluntly: “James’ plan is a deliberate attempt to get around federal protections for retirees because alternative investments are not generally allowed in the 401(k) world. This is about making Blackstone and other private equity firms even richer than they already are.”

“This new plan depends on sweeping government mandates, the appropriation of trillions of dollars from the private sector that is then handed over to zillionaire investment managers who make no guarantees about rates of returns or discounted fees,” said South Carolina Treasurer Curtis Loftis, a Republican who serves on his state’s pension investment council, which contracts with Blackstone. “The only guaranteed benefit I see in this plan is one for wealthy money managers and their cronies. Wall Streeters reading this plan will understand, without having specifically been told, that having Hillary Clinton and the federal government use its power to aggregate the existing and future retirement funds of working Americans and entrust it to them is the Holy Grail of finance.”

Under their proposal, “Retirement portfolios would be created by a board of professionals who would be fiduciaries appointed by the president and Congress,” James and Ghilarducci wrote in a New York Times editorial. “The fees and investments would be much less prone to corruption because the managers’ income would not depend on the investments.”

Alternative investments, though, are notoriously opaque. The contracts between financial firms and pensions are secret, making it difficult to evaluate whether they are being competitively bid or whether they involve illicit kickbacks. A recent whistleblower lawsuit in New Mexico accused Blackstone of being part of an influence-peddling scheme, and USA Today in 2009 tracked how Blackstone officials had made donations to public officials in states that had awarded the company pension management deals.

Full Article, Somewhat Long Read, Worthwhile - http://www.ibtimes.com/political-capital/hillary-clinton-wall-street-financial-industry-may-control-retirement-savings

#Retirement #Politics #WallStreet #Clinton #CrookedHillary #PaytoPlay

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1   lostand confused   2016 Oct 19, 5:52am  

Citigroup okd the cabinet under Obozo-so the lefties will say what is new!

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