Although bankers and other corporate officers draw fire in press reports about the 2008 financial meltdown, union officers and trustees are responsible for the management of pension funds that are now severely underfunded . In fact, government records show union pensions were under pressure even before the stock market plunge. Why is this not news?
Wall street officials and banking executives who largely responsible for the financial meltdown that began toward in the end of 2008 and for the financial pain that is still felt across America, according to the New York Times. But thanks to union leaders who have accumulated research on derivatives and mortgage closures these same bankers are finally being held to account, a new report suggests.
By and large, the financial institutions do not have any say here. There’s an innocuous quote from a Citigroup official who points out his bank was not involved in any of the transactions that have come under fire. Union officials, however, are free to sound off against corporate America.
The meat of the report is as follows:
“Union leaders say the fortunes of banks and unions are linked more than people realize,” The Times says. “Wall Street manages union pension portfolios worth hundreds of billions of dollars. Much of that is invested in financial institutions, giving unions a loud voice as shareholders.
Then there are all the unionized workers whose fates are indirectly shaped by the world of high finance. The jobs of hundreds of thousands of union members, like police officers and teachers, have been threatened by municipal budget cuts, made worse in some cases by exotic investments gone bad.”
But the Gray Lady neglects to mention that unions select their own trustees to oversee retirement funds. Most union pension plans are known as multiemployer plans, which are comprised of several companies and generally only one union. The union appoints half the trustees of the plan.
Of course the overriding objective here is to bash Wall Street. Any information that unsettles this agenda is not likely to find its way into what passes for reporting in The Times. Contrary to what is often reported on union web sites, their pension plans are actually performing quite poorly. The Labor Department’s 5500 forms, which record the ratio of assets to liabilities, show that union pensions are severely underfunded and have been for some time.
In fact, government records show union pension fund assets were eroding long before the 2008 stock market plunge. But these key facts are omitted as they would draw pressure and attention away from corporate officials who have been set up as the villains. Instead of calling out labor leaders who have mismanaged their workers’ funds, The Times allows these same union bosses to bloviate and sound off at the expense of salient information.
“This month, the A.F.L.-C.I.O., the nation’s main labor federation, has organized 200 protests nationwide to publicly shame bankers, calling for new taxes on bankers’ bonuses and on speculative short-term financial transactions — in the hope of collecting tens of billions of dollars to finance a job creation program,” the report says.
“They played Russian roulette with our economy, and while Wall Street cashed in, they left Main Street holding the bag,” Richard L. Trumka, the A.F.L.-C.I.O.’s president, said last Friday at a rally in Philadelphia. “They gorge themselves in a trough of taxpayers’ dollars, while we struggle to make ends meet.”
The average union pension has resources to cover only 62 percent of what is owed to participants, according to the Pension Benefit Guarantee Corp. Pensions with less than 80 percent of the assets needed to cover present and projected liabilities are considered “endangered,” while those that fall below a 65 percent threshold are classified as “critical” under the Pension Protection Act of 2006.
Pension Benefit Guarantee Corp. figures also state that less than one in every 160 workers is covered by a union pension with required assets.
Now that’s a story, but not one that will be covered in The Times.
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It seems to me that you have just touched the surface and it is worse than mismanagement by union leaders. The union members should be very angry with their leaders for mismanaging their money. Wall Street doesn’t make the investment decisions. Wall Street doesn’t decide how much the union leaders are paid or what the due are spent on. The blame rests squarely on the shoulders of union leadership.