Updated: 5/16/2006; 3:21:41 PM.

Current events
Post-9-11 events and analyses


daily link  Tuesday, March 15, 2005


Group Leaves Social Security Overhaul Bloc: Cracks in the GOP.  "Signaling more troubles ahead for President Bush's campaign to overhaul Social Security, a group representing the nation's biggest financial companies said Monday that it had decided not to renew its membership in a business coalition raising millions of dollars to back the effort.

The Financial Services Forum, which represents chief executives from such corporate heavyweights as American Express, Citigroup and Goldman Sachs, was a co-founder of the Coalition for the Modernization and Protection of America's Social Security, or Compass. But it left the coalition last month after its members failed to agree on Bush's plan to let workers divert some of their payroll tax into individual investment accounts...

[It was] the latest indication of the conflicting pressures facing corporate executives on one side, a White House eager for their backing on Bush's top domestic priority and on the other, corporate shareholders wary of endangering profits by entering a politically charged battle that could alienate customers and some investors. Trepeta said the forum had helped to create Compass to push for Social Security restructuring in general, and it was not prepared to become embroiled in a highly partisan war over private investment accounts...

The forum's shift follows the decision by two securities firms Edward Jones and Waddell & Reed to drop out of a related lobbying group set up to promote private accounts on Capitol Hill, the Alliance for Worker Retirement Security. ..

Financial services companies have come under particular pressure from opponents of private accounts, especially the AFL-CIO. These critics charge that the companies stand to benefit from Bush's plan to let workers divert taxes into stocks and bonds that the companies would manage. The AFL-CIO wrote to Lazio on Monday demanding to know where his group's members stood on private accounts and calling on the forum to "disavow" its support for the accounts. Because labor unions control large amounts of money for investment, through pension and mutual funds and as institutional shareholders, they have strong leverage with brokerage and financial services firms. The AFL-CIO has organized demonstrations against some firms; more are planned this month against Charles Schwab and Wachovia. Schwab officials have said they remain neutral on private accounts. ..

The forum represents 20 large firms and is the first known defection from Compass, which is raising an estimated $20 million to promote private accounts as part of a campaign coordinated with the White House and the Republican National Committee. 

William Patterson, an AFL-CIO official who has helped organize the federation's efforts to pressure corporations into withdrawing from the White House-backed coalitions, said Monday that he "applauded" the forum's decision. He said the group's move might heighten pressure on other financial services groups, such as the Securities Industry Assn., whose membership list overlaps that of the forum, to follow suit.  "The position that the industry associations have taken was untenable that you can be in an advocacy position while your members are telling the investing public that they're neutral or not taking a position," said Patterson, director of the AFL-CIO's investment office. "We could not find a single firm that would stand by the Compass position." "

  10:01:23 PM  permalink  

 
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Copyright 2006 © Ken Novak.
Last update: 5/16/2006; 3:21:41 PM.