Subject: [Homestead] There's plenty of money for this administration to waste
Date: Thu, 14 Oct 2004 14:06:39 -0700
No, I am not referring to Tom Ridge pissing away $500,000 on a big
two-year party on the occasion of his second year as Home Security head,
monstrous as that is, but the impending taxpayer bailout of the Pension
Guaranty Fund in the wake of the $1.4 Trillion taxpayer bailout of the
Savings and Loan system---both Triumphs of Deregulation!!
You don't want to buy my bridge??---have I got a bargain for you---I
paid you $50,000,000 dollars, Mr. Pension Guaranty Trust, and all I want
from you is an $6.4 billion dollar reward---doesn't that sound reasonable?
Deregulation is SUCH A MARVELOUS DEVICE---I know Ali Baba is eating his
heart out somewhere, because he can't get in on it.
Sure, you will go belly up too, but what the hell, it's identical to the
monstrous taxpayer bailout of the Savings and Loan taxpayer bailout of
the 1980's.
You DO remember the Savings and Loan taxpayer bailout don't you---I know
it escaped the attention of President Bush, but then he has a pretty
short attention span, except for more important things like sponsoring
an earthshaking event like a gay-marriage Constitutional Amendment,
which will surely cure the 50% failure-rate of heterosexual marriages.
But as a reminder, the Savings and Loan bailout cost the taxpayer $1.4
TRILLION DOLLARS!!
Savings and Loan Scandal
Here are some facts on the infamous S&L scandal of the eighties which we
are still paying for.
* The Savings and Loan scandal is the largest theft in the history
of the world.
* Deregulation eased restrictions so much that S&L owners could lend
themselves money.
* The Garn Institute of Finance, named after Senator Jake Garn,
co-authored the deregulation of the industry and received $2.2 million
from industry executives.
* Neil Bush, George Bush's son, never servered time in jail for his
part in running an S&L into the ground.
* Represenative Fernard St. Germain, who was head of the House of
Representatives banking, co-authored the deregulation and was voted out
of office after other questionable dealings and was sent back to D.C. as
an S&L lobbiest.
* Charles Keating, when asked if massive lobbying efforts had
influenced the government officials, he replies "I certainly hope so."
* The rip-off began in 1980 when the government raised the federal
insurance on S&L's from $40,000 to $100,000 even though the typical
savings account was only around $6000.
* Some of the seized assets were a buffalo sperm bank, a racehorse
with syphilis, and a kitty litter mine.
* James Fail invested $1000 of his own money to purchase 15 failing
S&L's. The government reimbursed him $1.85 billion in federal subsidies.
* It sometimes took over 7 years to close failing S&L's by the
government.
* When S&L owners who stole millions went to jail, their sentances
were typically one-fifth that of the average bank robber.
* The goverment bail out will cost the taxpayers around $1.4
trillion dollars when it is over.
* If the White House had stepped in and bailed out the S&L's in 1986
instead of delaying until after the 1988 elections, the cost might have
been only $20 billion.
* With the money lost from the S&L scandals, the government could
have provided prenatal care for every American child for the next 2,300
years.
* With the money lost from the S&L scandals, the government could
have purchased 5 million average homes.
* The authors of "Inside Job", a book about the S&L scandal, found
criminal activity at every S&L they investigated.
Facts were taken from"Inside Job" and "It's a Conspiracy! by the
National Insecurity Council.
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Copyright 1995-2003, by Charles R. Grosvenor Jr.
United's pension woes: sign of bigger issue
Ailing airline may end all of its pension plans, creating the biggest
default in US history and forcing a possible bailout.
By Alexandra Marks | Staff writer of The Christian Science Monitor
NEW YORK - Despite ongoing negotiations with its unions, United Airlines
has told the bankruptcy court that the "likely result" will be a
decision to terminate all of its pension plans.
That would precipitate the biggest pension default in history, more
twice the size of the Bethlehem Steel Corporation default in 2002. The
move is expected to destabilize the already struggling airline industry,
prompting other old-line carriers like Delta to eventually follow suit
to maintain competitiveness.
It would also put additional pressure on the Pension Benefit Guaranty
Corporation (PBGC,) the federal agency that insures traditional pensions
in case companies go belly up. It's already facing more than a $9
billion shortfall. A default by United would saddle it with an
additional $8.4 billion in unfunded obligations. If other airlines
follow, the PBGC may have to go to Congress and plead for a bailout that
some experts say would be bigger than the Savings and Loan debacle of
the 1980s.
More broadly, what all this means is that retirement for US workers just
isn't what it used to be. Forget the gold watch and reliable pension
check after 30 years of service. The impact of globalization and
competition from low-wage companies that don't provide benefits has
shifted the onus of retirement security from larger firms onto individuals.
Twenty years ago, 40 percent of American workers were covered by
traditional pensions known as defined-benefit plans. Today that number's
dropped to 20 percent. As the Bethlehem Steel and United examples show,
even that 20 percent may not be able to count on what they've been
promised. Currently, about 75 percent of those corporate plans are
underfunded. "There are numerous threats to retirement in the future,"
says Brad Belt, executive director of the PBGC. "So it's incumbent on
individuals to be well informed, prudent about their investments, and to
save accordingly."
To get a sense of the impact of the pension crisis on individuals, look
at what United employees can expect. Pilots, who by law must retire at
60, could see their retirement income cut by 75 percent.
Betty, who asked that her name not be used, has been flying for United
for 26 years. She was expecting to retire with $140,000 a year. After
the recent round of give-backs, that was cut to $90,000. But if United
defaults as expected, she'd receive only $28,000 from the PBGC. If she
waits until 65 to start collecting, she could be eligible for as much
$44,500 a year.
Either way, once pilots are forced to leave the cockpit at 60, most will
probably look for another job rather than lounge on the golf course.
Betty has already started a mediation business on the side. "All of the
benefits that I'd been promised during those 26 years have been erased
by corporate American greed," she says. "And yet I can see the big
picture. I've said for three years that our pensions are history. No
matter how many promises they make us, if the money isn't there, it
isn't there."
For the pilots union, which negotiated the pension benefits over the
years, often giving up wage increases for better retirement packages,
the current situation is infuriating. They see pensions as benefits that
are earned, like employee paychecks, not a bonus to be given as long as
a company can afford it. "It seems immoral that just because they happen
to be in a legal situation, they can walk away from those obligations,"
says Steve Derebey, spokesman for Air Line Pilots Association. "Why this
isn't a burning, blazing campaign issue is beyond me."
For United's managers the situation is just as stark. Because they are
currently negotiating with the pilots, they wouldn't comment. But some
experts say the company's decision to announce in bankruptcy court that
it expected to default reflects its "frustration" with the perceived
union intransigence. "United has been trying to engage its unions for a
long period of time," says John Budd, a labor-relations expert at the
University of Minnesota's Carlson School of Management. "This reflects
its frustration with its inability to get them constructively engaged."
Many aviation experts contend that after two years in bankruptcy, and
with its finances still precarious, United has no other choice but to
default. That's because competition from lower-cost airlines, many of
which provide 401(k) plans instead of traditional pensions, have
transformed the economics of the aviation industry. "The cost of
maintaining defined-benefit-pension plans doesn't make any sense because
you've got the low-cost carriers entering the market with such dramatic
cost advantages to begin with," says Jon Ash, managing director of
Global Aviation Associates in Washington. "Like in other industries, the
day of the defined-benefit pension plan is long gone."
Mr. Ash, like other aviation experts, believes that once United defaults
other carriers like Delta and USAirways will also have to find a way to
dramatically reduce their pension obligations. USAirways, which already
has defaulted on its pilots' pension plans during its first trip to
bankruptcy court in 2002, has warned that it may default on others as
well. Delta, which is teetering on the edge of bankruptcy, may have no
choice but to follow suit.
For the PBGC, which is already facing a long-term funding gap, that
scenario could spell trouble. That's in part because as the number of
companies switching from traditional pensions to 401(k) plans drops, so
does the PBGC's premium income. Currently, the remaining companies pay
the PBGC $19 per employee to insure their defined-benefit pension plans.
While the PBGC can charge more if a pension fund is underfunded,
companies don't always pay up, as the Bethlehem Steel case illustrates.
It didn't pay the increased costs even after it stopped paying into its
plans. And the current premiums do not reflect the real costs of
insuring the pensions. For example, over the years United has paid into
the PBGC only $50 million dollars. If it defaults, it will saddle the
government insurance agency with $6.4 billion dollars worth of claims.
"We need to take measured action now to address those threats to the
system," says the PBGC's Mr. Belt.
Here are some facts on the infamous S&L scandal of the eighties which we
are still paying for.
* The Savings and Loan scandal is the largest theft in the history
of the world.
* Deregulation eased restrictions so much that S&L owners could lend
themselves money.
* The Garn Institute of Finance, named after Senator Jake Garn,
co-authored the deregulation of the industry and received $2.2
million from industry executives.
* Neil Bush, George Bush's son, never servered time in jail for his
part in running an S&L into the ground.
* Represenative Fernard St. Germain, who was head of the House of
Representatives banking, co-authored the deregulation and was
voted out of office after other questionable dealings and was sent
back to D.C. as an S&L lobbiest.
* Charles Keating, when asked if massive lobbying efforts had
influenced the government officials, he replies "I certainly hope so."
* The rip-off began in 1980 when the government raised the federal
insurance on S&L's from $40,000 to $100,000 even though the
typical savings account was only around $6000.
* Some of the seized assets were a buffalo sperm bank, a racehorse
with syphilis, and a kitty litter mine.
* James Fail invested $1000 of his own money to purchase 15 failing
S&L's. The government reimbursed him $1.85 billion in federal
subsidies.
* It sometimes took over 7 years to close failing S&L's by the
government.
* When S&L owners who stole millions went to jail, their sentances
were typically one-fifth that of the average bank robber.
* The goverment bail out will cost the taxpayers around $1.4
trillion dollars when it is over.
* If the White House had stepped in and bailed out the S&L's in 1986
instead of delaying until after the 1988 elections, the cost might
have been only $20 billion.
* With the money lost from the S&L scandals, the government could
have provided prenatal care for every American child for the next
2,300 years.
* With the money lost from the S&L scandals, the government could
have purchased 5 million average homes.
* The authors of "Inside Job", a book about the S&L scandal, found
criminal activity at every S&L they investigated.
Facts were taken from"Inside Job" and "It's a Conspiracy! by the
National Insecurity Council.