Watch Out Patriots, The Conservative Wall Street Plutocrats Are Coming After Your Pension

Watch Out Patriots, The Conservative Wall Street Plutocrats Are Coming After Your Pension

Lips are smacking on Wall Street. Today’s tasty treat? The pensions of hard-working people across America. Financial hustlers have been working overtime to convince the population that we are in the midst of an “unfunded liability crisis” in which states and cities can no longer afford to pay pensions to public workers. Here’s the truth: Wall Street predators have had their hands in the pension cookie jar for decades, and now they’re poised to gobble up the retirements of teachers and firefighters in yet another orgy of greed.

Unknown to much of the public, Wall Street has been soaking state and municipal coffers with derivatives schemes and various frauds for years [3]. As Alexander Arapoglou and Jerri-Lynn Scofield have explained, not only have Wall Street banks screwed public finances with fancy credit default swaps and other "innovative" financial products that blow up in the faces of cities and states, they have also been engaged in widespread frauds that squeeze pension yields. This happened in the LIBOR rate-rigging scandal [4], in which big banks were found to be manipulating interest rates, which has resulted in lower returns on pension fund investments and has caused shortfalls in pension plans. The lack of actions from authorities means this kind of hustling will surely continue.

Rolling Stone’s Matt Taibbi has just published an article [5] outlining how this gigantic heist is going down. While Wall Street has been on its scam-a-licious rampage, no-good politicians have been taking taxpayer money meant for pensions and spending it on whatever they wanted, depleting funds. (This is actually securities fraud, but the nearly toothless SEC has barely lifted a finger to address it.) Even so, pensions were still in fairly decent shape when the crash of 2008 came and wrecked budgets across America. The Wall Street-driven financial crisis crushed state and local revenues, and the financiers decided this was the perfect moment to dive in for yet another helping of public money by seizing control of public pensions.

In Taibbi’s colorful words: “This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era.”

Wall Street has plenty of politicians in its pockets to grease the wheels. Taibbi hones in on the notorious example of Rhode Island treasurer Gina Raimondo, a former venture capitalist who made the war against pensions her raison d’etre and handed over a billion in pension funds to hedge funds that could charge the strapped state boatloads of hidden fees to manage them. Firms like Goldman Sachs and Bain Capital, along with predators like billionaire John Arnolds, formerly of Enron, are overwhelmed with joy and have filled Raimondo’s coffers for a 2014 gubernatorial run. They know a good thing when they see it.

Wall Street’s PR message? The country’s financial woes were the fault of hard-working elementary school teachers and cops. It’s an audacious, shockingly cynical lie, but with enough money thrown behind it, the lie has spread like a cancer through the media and the political world. Rapacious bankers have successfully pitted private sector workers who have been losing their pensions against public sector folks who were still hanging on to theirs—a tried and true divide-and-conquer tactic that means big money for criminal banksters.

The villains who have helped spread this lie include the folks at Pew Charitable Trusts, an organization known for its centrism and number-crunching. Starting in 2007, Pew started rolling out studies suggesting that pensions were unsustainable, and found an eager accomplice in the form of noxious billionaire John Arnold, a right-winger and former Enron commodities trader who, as Taibbi reports, was “helping himself to an $8 million bonus while the company's pension fund was vaporizing.”

Arnold created a foundation named after himself to focus on “reforming” pensions, and got some big-name Republicans and Tea Partiers, like Dick Armey and Orrin Hatch, to get the game going. “Arnold and Pew struck up a relationship,” writes Taibbi, “and both have since been proselytizing pension reform all over America, including California, Florida, Kansas, Arizona, Kentucky and Montana.” Over and over, they cited an “unfunded liability crisis” conveniently overlooking the glaring fact that the financial crisis and various Wall Street investment schemes are the reason states and cities are having a hard time paying workers what they were owed. They pretend the problem is that worker pensions are too expensive—a big fat whopper that blames the victims of Wall Street’s own shenanigans.

Meanwhile, hedge funds continue to take over state pension funds with guarantees that their fees and hustling will be kept hidden from the public, all the while delivering underperforming returns on shitty investments. (Now it becomes clear why Wall Street had a massive freak-out at the idea that Eliot Spitzer, who understands their tricks, was nearly put in charge of managing New York City’s pensions in his recent run for comptroller.)

As Taibbi correctly concludes, the "unfunded liability" is largely a fiction. There are legitimate issues with pensions, “but the idea that these benefit packages are causing the fiscal crises in our states is almost entirely a fabrication crafted by the very people who actually caused the problem.”

And let’s just add a final twist to this tortuous story: Even if you’re not a public sector worker, Wall Street is determined to get its hands on your retirement, too, and it has got politicians in Washington, including President Obama, talking about cuts to Social Security [6] in the name of a phony debt ceiling crisis. It's the wet dream of Wall Street to weaken Social Security and take hold of American retirement money so that scam artists can charge outrageous fees and continue their rampage of thievery against people who work hard serving their communities and simply want to retire with some modicum of dignity.

To be fair president Obama has offered the possibility of making future increase in Social Security tied to an inflation mechanism called chained  CPI. While probably not a good idea since it fails to take into account prices for some items that cannot be bought at discount or have generic substitutes, it is not thief. The rest is the usual story - anything, any kind of greed, abhorrent behavior is OK for Wall Street because they're doing it in the name of capitalism. They're giving capitalism a really bad reputation at this point since it seems to mean stealing from the middle-class and working poor to give to millionaires..