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JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds

 
Redheaded Stepchild
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JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh, sure, they have had such GREAT success with everything else they've managed thus far...

(where the hell is a SARCASM smilie when you need one?)

[link to www.businessweek.com]

Now Wall Street Wants Your Pension, Too

JPMorganChase, Citi, Cerberus, and Morgan Stanley are among the firms lobbying Washington to let them take over and run corporate pension funds

by Matthew Goldstein

The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme.

In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped, including those at IBM IBM, Hewlett Packard (HPQ), Verizon (VZ), and Alcoa (AA). And that figure could triple by 2012, according to consulting firm McKinsey. By managing those troubled plans, Wall Street also gains entrée to an appealing set of customers to whom it can sell a broad array of fee-generating products. "We have identified several clients who would be willing to be first to sell a plan," says Scott Macey, a senior vice-president at Aon Consulting. "But the question is, when is a good time for this?"

The concept of off-loading pension funds sounds great. For businesses it's a chance to rid themselves of struggling plans, which can weigh down a balance sheet. It's especially good timing now. New accounting rules take effect in the next year or so that will require companies to mark their pension assets to prevailing market prices each quarter—a change that could devastate some companies' profits. Meanwhile, many companies no longer want to pay for pensions, troubled or otherwise. A recent report from the U.S. Government Accountability Office found that most companies freeze their pension plans merely to avoid "the impact of annual contributions to their cash flows."

But the gambit to turn pensions into for-profit enterprises raises troubling questions. Critics, including some on Capitol Hill, worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk. "We think it's just a terrible idea," says Karen Friedman, policy director for advocacy group Pensions Rights Center. "In the wake of the subprime crisis, it would be crazy to allow financial institutions to manage these plans."

Wall Street's Dumping Ground
Historically, pension funds have been managed conservatively, in keeping with the broad goals of long-term wealth accumulation. Alternative investments such as hedge funds, derivatives, and asset-backed securities represent less than 25% of pension assets. If financial firms get involved, exotic investments could swell to 50% of pensions assets by 2012, predicts McKinsey. The biggest fear is that Wall Street could use retirement portfolios as a dumping ground for its most toxic and troublesome investments. It's not unlike what regulators allege UBS officials did with its stockpile of risky auction-rate securities by trying to off-load them to wealthy clients.

If Wall Street gambles with those pension assets and loses, U.S. taxpayers would probably foot the bill. When a company with a pension goes belly up today, the Pension Benefit Guaranty Corp., under federal law, has to take on the fund's obligations and dole out money to its beneficiaries. It's a costly burden: The PBGC currently runs a $14.1 billion deficit.

Former PBGC director Bradley Belt argues that pension buyouts could actually strengthen the agency. If financially strapped companies could dump the plans rather than ponying up money for them, they might stay out of bankruptcy. That would mean the PBGC wouldn't have to step in and pick up the pieces of the pension. "While there are legitimate regulatory and policy considerations, much of the criticism is misplaced," says Belt, who two years ago teamed up with private equity firm Reservoir Capital to form Palisades Capital Advisors, a pension buyout boutique. "This is really in the public interest if it's done correctly."

The federal agencies that oversee the nation's pension system are expected to weigh in on the issue—potentially paving the way for big firms that have been pursuing it, such as Aon, Cerberus Capital Management, Citigroup, JPMorganChase, Morgan Stanley, and Prudential. JPMorgan has been particularly active in this crusade, sending a letter in September 2007 to several federal agencies with its own "guidelines for pension transfers." The Government Accountability Office, which began studying the proposal at the behest of the Congress, plans to issue a report later this year.

How They Do It Across the Pond
The biggest regulatory kink that needs to be ironed out is a tax one. Under federal pension laws, an employer can deduct part of its pension plan contributions. But it's unclear if banks or private equity firms that buy the plan would get the same tax break since they don't technically employ the workers. Squashing that perk could make such buyout deals less appealing to Wall Street. Sources familiar with the situation say the Internal Revenue Service is expected to offer a dim view of extending the current tax break to purely financial buyers. The Bush Administration is likely to take a different stance, favoring such deals in certain circumstances.

Regulators are almost certain to put the kibosh on buyouts by free-standing, independent firms that aren't tied to the books of any big firm. The worry is that such a weakly capitalized company wouldn't have the balance sheet heft to deal with the pensions if their assets soured. After all, even big Wall Street firms have been crippled by the $400 billion in subprime related losses.

Belt, a former top aide to presumptive Republican Presidential nominee Senator John McCain, had pushed a similar vehicle to make buyouts. The proposal created controversy in the industry. In its letter to regulators, JPMorgan took pains to distance itself from the strategy shopped around by Belt and other private equity firms. The bank's legal team recommended that regulators green-light buyouts only by "institutions and structures that are well regulated" and "subject to high standards of financial strength and stability."

Although any restrictions by the federal government could dampen the spirits of the buyout brigade, Wall Street are likely to simply follow the lead of financial firms in Britain. Companies there off-load their pension assets by purchasing a group annuity from an insurer. That market took off 18 months ago when the country's regulators instituted more onerous pension accounting rules. Since then, nearly a dozen specialized insurers have opened up shop to offer the products. Many of the new players are backed by Goldman Sachs, JPMorgan, Cerberus, Warburg Pincus, and Deutsche Bank—some of the same names that are trying to import the concept to the U.S.

U.S. companies already have that avenue of escape thanks to the federal pension rules. But the high costs associated with such insurance products have limited their use. That's already changing. A dozen U.S. life insurers, including John Hancock, Prudential, and MetLife, now offer a way for companies to get rid of the pension burden. And though the market remains small, insurers sold $2.88 billion worth of such policies last year—triple the amount three years ago. Those figures could rise if Wall Street decides set up insurance units to offer those types of annuities.

Goldstein is a senior writer at BusinessWeek.
"Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis." Karl Denninger

Don't blame me; I voted for Ron Paul.


Silence is consent.
locomotion
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08/06/2008 01:25 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Well yes Redhead, their past excellent performance should be rewarded for sure (I almost can't even type that without gagging lol)

Next would be the Social Security funds, all tucked away in that famous lockbox. Oh yeah, I know El Bushwhacker already tried to foist this idea off on us without much success, but possibly all the financial blows have softened us up since then? At least in the head, if not in the heart...
Anonymous Coward
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08/06/2008 01:52 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Yep, rip off the pension funds and the rape of the US will be complete.
locomotion
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08/06/2008 02:02 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Yep, rip off the pension funds and the rape of the US will be complete.
 Quoting: Anonymous Coward 456963


I can't help but wonder how many Pension Funds are still really there? Figures on paper can lie, creative accounting has become a lower art-form.

Most Pension Plans are invested. The managers of the funds have a fiduciary obligation to invest them to make money. Some plans allow participants to choose high or low risk investments, or a combo.

Years ago we saw the handwriting on the wall and took our funds out, incurring lots of penalties and taxes to do so. No regrets here.

I got a real bad feeling about this one Bob.
Anonymous Coward
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08/06/2008 02:19 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
jp morgan already handles the gov't debit accounts, like food stamps and such.
locomotion

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08/06/2008 04:45 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
yup, got their foot in the door.

Now comes the sales pitch...
If we do not hang together, we shall surely hang separately. ~Thomas Paine

I've been dead before. ~Spock, The Unknown Country (PEACE)
Redheaded Stepchild  (OP)

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08/06/2008 09:05 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Well yes Redhead, their past excellent performance should be rewarded for sure (I almost can't even type that without gagging lol)

Next would be the Social Security funds, all tucked away in that famous lockbox. Oh yeah, I know El Bushwhacker already tried to foist this idea off on us without much success, but possibly all the financial blows have softened us up since then? At least in the head, if not in the heart...
 Quoting: locomotion 479924


I sure as hell hope we've learned our lessons with the bursting housing bubble.
"Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis." Karl Denninger

Don't blame me; I voted for Ron Paul.


Silence is consent.
Anonymous Coward
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08/06/2008 09:19 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
is it just me, or are there already TOO many
foxes in the henhouse !!!
:(
Redheaded Stepchild  (OP)

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08/06/2008 09:22 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
is it just me, or are there already TOO many
foxes in the henhouse !!!
:(
 Quoting: Anonymous Coward 352725


There are a lot more broken eggs right now than there were a year ago.
"Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis." Karl Denninger

Don't blame me; I voted for Ron Paul.


Silence is consent.
Sara-Ka-El

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08/06/2008 09:23 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh no.

wtf

You want to see what a government run pension looks like? Look at medicaid.
From Cooperate Law to Public Defense

Truth is a Stranger to Fiction

Learn to Swim

In the Instancy of Atomic Love, the Footloose are Dead
Redheaded Stepchild  (OP)

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08/06/2008 09:25 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh no.

wtf

You want to see what a government run pension looks like? Look at medicaid.
 Quoting: Sara-Ka-El


Medicaid isn't a pension. I'll agree that it's somewhat ill managed, however.
"Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis." Karl Denninger

Don't blame me; I voted for Ron Paul.


Silence is consent.
Sara-Ka-El

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08/06/2008 09:26 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh no.

wtf

You want to see what a government run pension looks like? Look at medicaid.


Medicaid isn't a pension. I'll agree that it's somewhat ill managed, however.
 Quoting: Redheaded Stepchild

That's what I meant. I think you have an awesome mind, RHSC.
From Cooperate Law to Public Defense

Truth is a Stranger to Fiction

Learn to Swim

In the Instancy of Atomic Love, the Footloose are Dead
Daniel

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08/06/2008 09:50 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds

I remember when Corp Retirement Plans were 90% funded.

Then Less & Less - down to about 20% now(a guess.)

Then there were the 70's & the Corporate raiders -

Sell off the Assets and GET the RET Funds.

TRUST YOUR CEOs !!!! HAR HAR!@!!!

Daneil


nazi bush
Anonymous Coward
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08/06/2008 10:14 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
You'd think that this would be a simple NO from both citizens and government alike.

What is the benefit of them doing this?

I know we all say, "if this, then that". But seriously, if our government lets this happen, then they really aren't for the people. They all KNOW what is going on. It's just sinful more than anything.
Anonymous Coward (OP)
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08/06/2008 10:21 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
You'd think that this would be a simple NO from both citizens and government alike.

What is the benefit of them doing this?

I know we all say, "if this, then that". But seriously, if our government lets this happen, then they really aren't for the people. They all KNOW what is going on. It's just sinful more than anything.
 Quoting: Anonymous Coward 460221


I know I sound cynical as all get out...but I have to tell you straight up that "they really aren't for the people." Yes, they know what's going on. They know. And they don't care. Their central desire at this point is that they will be generously compensated.
Stalin's Ghost
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08/06/2008 10:26 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
greetings & welcome to 1974!

already a done deal

[link to www.pbgc.gov]

iamwith
Anonymous Coward (OP)
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08/06/2008 10:36 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
greetings & welcome to 1974!

already a done deal

[link to www.pbgc.gov]

iamwith
 Quoting: Stalin's Ghost 408056


HO-LEE-SHIT.

Okay, I sure hope this doesn't get me banned again, but I've got to post the appropriate link so people can see what this AC has shared.

BusinessWeek's article implies that the banksters are lobbying, but in truth, the damned government is putting out frakkin' REQUESTS FOR PROPOSALS from the banksters.

HO-LEE-SHIT.

(I've got my fingers crossed...please don't ban me...please don't ban me...please don't ban me...gulp, okay, here goes!!!)

[link to www.pbgc.gov]

FOR IMMEDIATE RELEASE
August 01, 2008
PBGC Public Affairs
202-326-4343

PBGC Solicits Strategic Investment Partnerships, Will Allocate $2-$2.5 Billion to Private Equity and Real Estate Portfolios

WASHINGTON—The Pension Benefit Guaranty Corporation (PBGC) today announced it has published a request for proposals (RFP) to form strategic partnerships with outside firms to assist the Corporation in carrying out the new investment policy adopted by the PBGC Board of Directors earlier this year.

The new policy directs 10 percent of PBGC assets (currently about $5.5 billion) to private equity and real estate investments. Under the current RFP, the Corporation seeks two to three firms to manage $2-$2.5 billion in these asset classes. The firms must have global operations and must have successfully managed private equity or real estate allocations, as well as at least $1 billion in strategic partnerships within the past 3 years. The official solicitation, including full details on the services required and instructions for submitting proposals, appears on the U.S. Government’s FedBizOps centralized procurement Web site: www.fbo.gov.

Reviewing today’s announcement, PBGC Director Charles E.F. Millard commented, “As our investment portfolio has become increasingly diversified, we are using more sophisticated techniques to mitigate risk and safely enhance returns. By entering into strategic partnerships with firms that have top-tier expertise in alternative investment classes, we seek to build capacity to better oversee our portfolio. PBGC already has a deep bench of experienced money managers and financial advisers, and we expect the firms selected under this RFP to beef up our roster of talent. We also seek the deep consultative dialogue and other services that world-class firms can provide in strategic partnership."

Through the strategic partnerships, the PBGC will leverage the entire array of financial, quantitative and qualitative resources of each firm. The Corporation anticipates that these resources will include asset management, consolidated performance reporting, risk mitigation, staff training and other resources that bidders may propose.

To assist in developing the RFP and evaluating proposals, the PBGC has hired EnnisKnupp + Associates of Chicago, which advises clients, including the Teacher Retirement System of Texas, on strategic partnerships. "The use of strategic partners by institutional investors has increased over the past several years," said Steve Cummings, president and CEO of EnnisKnupp. "Strategic partners build on the traditional asset management relationship but broaden and deepen the interaction between partners. Investment managers gain the benefit of a significant and long-term client, and institutional investors benefit from a broad range of products and services not confined solely to asset management."

Millard emphasized the responsibility of the PBGC and its investment advisers in the face of the Corporation’s $14 billion deficit. "With our new asset allocation, asset managers with top-tier performance, and the help of excellent strategic partners, PBGC will have a much sounder foundation for the future," he said.

The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 30,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC’s investment returns.

— ### —
PBGC No. 08-42
loosecannon

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08/06/2008 11:21 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh, sure, they have had such GREAT success with everything else they've managed thus far...

(where the hell is a SARCASM smilie when you need one?)

[link to www.businessweek.com]

Now Wall Street Wants Your Pension, Too

JPMorganChase, Citi, Cerberus, and Morgan Stanley are among the firms lobbying Washington to let them take over and run corporate pension funds

by Matthew Goldstein

The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme.

In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped, including those at IBM IBM, Hewlett Packard (HPQ), Verizon (VZ), and Alcoa (AA). And that figure could triple by 2012, according to consulting firm McKinsey. By managing those troubled plans, Wall Street also gains entrée to an appealing set of customers to whom it can sell a broad array of fee-generating products. "We have identified several clients who would be willing to be first to sell a plan," says Scott Macey, a senior vice-president at Aon Consulting. "But the question is, when is a good time for this?"

The concept of off-loading pension funds sounds great. For businesses it's a chance to rid themselves of struggling plans, which can weigh down a balance sheet. It's especially good timing now. New accounting rules take effect in the next year or so that will require companies to mark their pension assets to prevailing market prices each quarter—a change that could devastate some companies' profits. Meanwhile, many companies no longer want to pay for pensions, troubled or otherwise. A recent report from the U.S. Government Accountability Office found that most companies freeze their pension plans merely to avoid "the impact of annual contributions to their cash flows."

But the gambit to turn pensions into for-profit enterprises raises troubling questions. Critics, including some on Capitol Hill, worry that financial firms don't have workers' best interest at heart, which would put some 44 million current and future retirees at risk. "We think it's just a terrible idea," says Karen Friedman, policy director for advocacy group Pensions Rights Center. "In the wake of the subprime crisis, it would be crazy to allow financial institutions to manage these plans."

Wall Street's Dumping Ground
Historically, pension funds have been managed conservatively, in keeping with the broad goals of long-term wealth accumulation. Alternative investments such as hedge funds, derivatives, and asset-backed securities represent less than 25% of pension assets. If financial firms get involved, exotic investments could swell to 50% of pensions assets by 2012, predicts McKinsey. The biggest fear is that Wall Street could use retirement portfolios as a dumping ground for its most toxic and troublesome investments. It's not unlike what regulators allege UBS officials did with its stockpile of risky auction-rate securities by trying to off-load them to wealthy clients.

If Wall Street gambles with those pension assets and loses, U.S. taxpayers would probably foot the bill. When a company with a pension goes belly up today, the Pension Benefit Guaranty Corp., under federal law, has to take on the fund's obligations and dole out money to its beneficiaries. It's a costly burden: The PBGC currently runs a $14.1 billion deficit.

Former PBGC director Bradley Belt argues that pension buyouts could actually strengthen the agency. If financially strapped companies could dump the plans rather than ponying up money for them, they might stay out of bankruptcy. That would mean the PBGC wouldn't have to step in and pick up the pieces of the pension. "While there are legitimate regulatory and policy considerations, much of the criticism is misplaced," says Belt, who two years ago teamed up with private equity firm Reservoir Capital to form Palisades Capital Advisors, a pension buyout boutique. "This is really in the public interest if it's done correctly."

The federal agencies that oversee the nation's pension system are expected to weigh in on the issue—potentially paving the way for big firms that have been pursuing it, such as Aon, Cerberus Capital Management, Citigroup, JPMorganChase, Morgan Stanley, and Prudential. JPMorgan has been particularly active in this crusade, sending a letter in September 2007 to several federal agencies with its own "guidelines for pension transfers." The Government Accountability Office, which began studying the proposal at the behest of the Congress, plans to issue a report later this year.

How They Do It Across the Pond
The biggest regulatory kink that needs to be ironed out is a tax one. Under federal pension laws, an employer can deduct part of its pension plan contributions. But it's unclear if banks or private equity firms that buy the plan would get the same tax break since they don't technically employ the workers. Squashing that perk could make such buyout deals less appealing to Wall Street. Sources familiar with the situation say the Internal Revenue Service is expected to offer a dim view of extending the current tax break to purely financial buyers. The Bush Administration is likely to take a different stance, favoring such deals in certain circumstances.

Regulators are almost certain to put the kibosh on buyouts by free-standing, independent firms that aren't tied to the books of any big firm. The worry is that such a weakly capitalized company wouldn't have the balance sheet heft to deal with the pensions if their assets soured. After all, even big Wall Street firms have been crippled by the $400 billion in subprime related losses.

Belt, a former top aide to presumptive Republican Presidential nominee Senator John McCain, had pushed a similar vehicle to make buyouts. The proposal created controversy in the industry. In its letter to regulators, JPMorgan took pains to distance itself from the strategy shopped around by Belt and other private equity firms. The bank's legal team recommended that regulators green-light buyouts only by "institutions and structures that are well regulated" and "subject to high standards of financial strength and stability."

Although any restrictions by the federal government could dampen the spirits of the buyout brigade, Wall Street are likely to simply follow the lead of financial firms in Britain. Companies there off-load their pension assets by purchasing a group annuity from an insurer. That market took off 18 months ago when the country's regulators instituted more onerous pension accounting rules. Since then, nearly a dozen specialized insurers have opened up shop to offer the products. Many of the new players are backed by Goldman Sachs, JPMorgan, Cerberus, Warburg Pincus, and Deutsche Bank—some of the same names that are trying to import the concept to the U.S.

U.S. companies already have that avenue of escape thanks to the federal pension rules. But the high costs associated with such insurance products have limited their use. That's already changing. A dozen U.S. life insurers, including John Hancock, Prudential, and MetLife, now offer a way for companies to get rid of the pension burden. And though the market remains small, insurers sold $2.88 billion worth of such policies last year—triple the amount three years ago. Those figures could rise if Wall Street decides set up insurance units to offer those types of annuities.

Goldstein is a senior writer at BusinessWeek.
 Quoting: Redheaded Stepchild


This really IS every bit as much of a con game as it looks to be on the surface.

Commercial banks NEVER have the best interests of their clients at heart.

And the fact that they first offered Hedge funds as a business model and now offer a new model is only evidence that commercial banks view pension funds as profit centers.

WHO is gonna take the fall when/if these funds fail?

It is already abundantly clear that pension funds will ultimately fail if they subscribe to business models commercial banks generate (Probably still true even if they don't). At least a large % of them will if/when the economy "bears" down on investors.

But allowing commercial banks to define the terms of that collapse is like asking the foxes to present a security strategy to protect the henhouse.

Beware of investment vehicles without asset backing.
jbar

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08/06/2008 11:38 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
JPMorganChase, Citi, Cerberus, Morgan Stanley and the other banksters are the shadow government. They tell the FED and Federal Government how to run the economy to make them (the banksters) the highest profits. What else would you expect...the rape continues...they WILL get the pension funds, too.
Anonymous Coward (OP)
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08/06/2008 11:41 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
This really IS every bit as much of a con game as it looks to be on the surface.

Commercial banks NEVER have the best interests of their clients at heart.

And the fact that they first offered Hedge funds as a business model and now offer a new model is only evidence that commercial banks view pension funds as profit centers.

WHO is gonna take the fall when/if these funds fail?

It is already abundantly clear that pension funds will ultimately fail if they subscribe to business models commercial banks generate (Probably still true even if they don't). At least a large % of them will if/when the economy "bears" down on investors.

But allowing commercial banks to define the terms of that collapse is like asking the foxes to present a security strategy to protect the henhouse.

Beware of investment vehicles without asset backing.
 Quoting: loosecannon


Well said, and thank you.
not quite
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08/06/2008 11:51 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Oh no.

wtf

You want to see what a government run pension looks like? Look at medicaid.
 Quoting: Sara-Ka-El


I have worked in the medical field for nearly 20 years and I can tell you, medicaid -aint half bad! Those people who have it, have a security and access to very good quality at healthcare no questions asked (almost) and basically FREE!
YES
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08/07/2008 12:43 AM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Thanks RedHeadedStepchild!!
Yes!! If we give them all the pensions it will stop the bleeding for a month,uh, well maybe a couple weeks.......... oh- but then they will piss that money away (sorry for the course language) and be back at the government bailout window for another rescue infusion,
and the pensions will be gone!!
Oh well, we can still talk about social security,now
or can we?...................lol
loosecannon

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08/07/2008 01:05 AM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
Thanks RedHeadedStepchild!!
Yes!! If we give them all the pensions it will stop the bleeding for a month,uh, well maybe a couple weeks.......... oh- but then they will piss that money away (sorry for the course language) and be back at the government bailout window for another rescue infusion,
and the pensions will be gone!!
Oh well, we can still talk about social security,now
or can we?...................lol
 Quoting: YES 479017


They want SS funds as a profit center as well.

That would be the stupidest thing the American people can do.
Anonymous Coward
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08/07/2008 01:55 AM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
These very banking institutions are listed among a very, long scrolling list of perpetrators at www.msfraud.org.

Go to www.msfraud.org and first read " How They Steal Your Home." Mortgage servicing companies along with the collusion of lawyers, courts and judges are allowed to put homeowners into 'fake foreclosures.

These companies listed in this subject title are listed under " The Servicers" at www.msfraud.org. They have been allowed to get away with this fraud for years with no investigation from Congress or the Senators of this country!!!
Bean There
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09/28/2008 07:09 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
bump for pertinence.
PWAY for life
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10/21/2008 09:49 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
You guys have misunderstood what they are trying to do. All pension plans HAVE to allocate to investments to fund thier obligations. It is the way it works across the board. The RFP they issued was to allocate a portion to alternative investments. They will not let the investment manager that wins manage the whole pension plan. Get your facts straight before jumping to conclusions!!
Anonymous Coward
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10/21/2008 10:03 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
like George Carlin sayz - ..they are going after your retirement money & they WILL get it.
RHSC
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10/21/2008 10:58 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
You guys have misunderstood what they are trying to do. All pension plans HAVE to allocate to investments to fund thier obligations. It is the way it works across the board. The RFP they issued was to allocate a portion to alternative investments. They will not let the investment manager that wins manage the whole pension plan. Get your facts straight before jumping to conclusions!!
 Quoting: PWAY for life 532126


That post was created in August. We have since had a rather ugly melt-down on Wall Street and with the Banksters, and all of it facilitated by the CorpGov. Who the hell would trust any of them?
Redheaded Stepchild  (OP)

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10/22/2008 12:09 PM
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Re: JPMorganChase, Citi, Cerberus, Morgan Stanley among firms lobbying Washington to let them take over and run corporate pension funds
AZNWARLORD first posted the following article here at GLP today:
Thread: ...

Here it is in its entirety, and frankly, I think we need to keep a close eye on this. They will steal the pensions there...and in the US.

[link to www.bloomberg.com]

Argentine Bonds, Stocks Sink as Takeover Fuels Default Concerns

By James Attwood and Drew Benson

Oct. 22 (Bloomberg) -- Argentina's bonds and stocks plunged for a second day as a planned government takeover of $29 billion of pension funds heightened concern the South American country is headed for its second default this decade.

The benchmark Merval stock index tumbled 15.8 percent on speculation President Cristina Fernandez de Kirchner plans to use the funds to meet financing needs that have swelled as prices on the country's commodity exports tumbled. Argentina hasn't had access to international debt markets since its 2001 default and demand for its local bonds has dried up in the past year on concern the government is underreporting inflation.

``It's the final of many nails in the coffin from an institutional investor perspective,'' said Bill Rudman, who helps manage $3 billion of emerging-market equity at WestLB Mellon Asset Management in London. Argentina is ``disappearing into irrelevance,'' he said.

The yield on the government's 8.28 percent bonds due in 2033 surged 6.25 percentage points to 30.94 percent at 11:05 a.m. in New York, according to JPMorgan Chase & Co. The bonds yielded 12.16 percent a month ago. The price dropped 7.11 cents to 22 cents on the dollar, leaving it down 14.91 cents in the past two days. The benchmark Merval stock index sank to a four- year low, extending its decline this week to 27 percent.

Fernandez, 55, announced her plan to take over 10 private pension funds during a speech in Buenos Aires yesterday, saying the proposal would help protect retirees from the global financial crisis. The last time Argentina sought to tap workers' savings was in 2001, just before it halted payments on $95 billion of bonds. Fernandez denied in the speech that her plan is a bid to ``grab the cash.''

HSBC, BBVA

The private retirement system, set up in 1994 to help bolster capital markets, owns about 5 percent of companies listed on the Buenos Aires stock exchange and 27 percent of shares available for public trading, data compiled by pension funds show.

The government's proposal to take control of the funds, including units of London-based HSBC Holdings Plc and Bilbao, Spain-based Banco Bilbao Vizcaya Argentaria SA, still needs congressional approval. BBVA fell 9.2 percent today in Madrid.

Argentina's borrowing needs will swell to as much as $14 billion next year from $7 billion in 2008, RBC Capital Markets, a Toronto-based unit of Canada's largest bank, said yesterday.

Fernandez made a bid to regain access to international markets last month, instructing her economic aides to pursue a renegotiation with creditors who rejected the country's 2005 payout of 30 cents for every dollar of defaulted debt.

International Lawsuits

Holders of about $20 billion of bonds turned down that 30- cent offer, which was the harshest sovereign restructuring since World War II, and many have filed lawsuits against Argentina.

``Tapping into the pension funds makes it blatantly obvious that it needs funds,'' said Aryam Vazquez, an emerging markets economist with Wells Fargo & Co. in New York. ``This is bad news any way you look at it.''

The cost of protecting Argentina's bonds against default soared today. Five-year credit-default swaps based on Argentina's debt jumped 3.92 percentage points to 36.08 percent, according to Bloomberg data.

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. An increase indicates a deterioration in the perception of credit quality.

`Immense Damage'

The peso was little changed today, rising 0.1 percent to 3.2150 per dollar, as traders said the central bank intervened in the foreign exchange market to shore up the currency.

The proposed takeover ``makes the chance of default in the short-term less likely by inflicting immense damage to the long- term credibility of the government and the financial system with its own people,'' said Paul McNamara, who helps manage $1.2 billion of emerging-market assets at Augustus Asset Managers Ltd. in London.

About 55 percent of the 94.4 billion pesos ($29.3 billion) held by the private pension funds is invested in government debt, according to the pension regulator's Web site. A takeover would allow the Fernandez administration to write off the sovereign bonds held by the funds, said Javier Salvucci, an analyst with Buenos Aires-based Silver Cloud Advisors.

`Short-Term Fix'

``It's a short-term fix that may cause more fiscal and macro pain in the long haul, which has been typical of the last two administrations,'' said Will Landers, who manages $5 billion in Latin American equities at BlackRock Inc.

Nestor Kirchner, Fernandez's husband and predecessor as president, began tightening restrictions on private pension funds last year, requiring them to keep more investments in the country to sustain economic growth.

Foreign emerging-market funds sold about $250 million in Argentine stocks through August this year in the biggest outflow since 2000, according to fund flow tracker EPFR Global in Cambridge, Massachusetts. The Merval is down 55 percent this year compared with a 42 percent decline for the Bovespa in neighboring Brazil.

The slide reflect concern that a 40 percent drop in commodity prices since July will throttle growth in South America's second-biggest economy. Argentina gets more than half its export revenue from wheat, soybeans, corn and other commodities.

Growth will slow to 5 percent this year and 2.5 percent in 2009, RBC Capital Markets said. The economy expanded 8.8 percent on average over the past five years as Kirchner and Fernandez used surging tax receipts to boost government spending on everything from civil servant pay rises to energy subsidies.

`Much, Much Worse'

Seven years ago, as the government tried in vain to stave off a debt default, it pressured the pension funds to participate in bond swaps that pushed forward repayment dates. That December, strapped for cash to pay salaries, it ordered the funds to transfer $3.2 billion in bank deposits to state-owned Banco de la Nacion.

The latest move is ``much, much worse,'' said McNamara at Augustus. ``It's not just shoving a little bit of debt in at the edge, it's taking over the whole system.''

To contact the reporters on this story: James Attwood in Santiago at [email protected] Benson in Buenos Aires at [email protected]

Last Updated: October 22, 2008 11:43 EDT
"Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis." Karl Denninger

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