Labor Department Pension Rule

Floor Speech

BREAK IN TRANSCRIPT

Ms. WARREN. Madam President, 8 years ago reckless bankers on Wall Street sparked a financial meltdown. Their too-big-to-fail banks gambled with our economy, encouraging reckless mortgage lending by funding the slimy subprime lenders who peddled their miserable products to millions of American families. Those same banks then gobbled up those dangerous mortgages, repackaged them, and spread huge risks throughout the financial system.

The consequences were disastrous. Wall Street greed destroyed $7 trillion in housing wealth and resulted in millions of Americans losing their homes. It killed 8.7 million American jobs. It gutted hundreds of pension funds, leaving millions of retirees hung out to dry.

Thanks to Washington bailouts, Wall Street is once again flying high. Corporate profits are up, and the stock market is soaring. But the real people who were hurt by the financial collapse--the millions of workers who lost their jobs, lost their homes, and lost their retirement savings because of Wall Street's reckless greed--many of them haven't bounced back. The evidence of this is everywhere, but consider just one recent example. Earlier this month, 400,000 participants in the Central States Pension Fund narrowly escaped having their hard-earned pension benefits slashed by as much as 70 percent. Their benefits were on the chopping block because that fund is in terrible trouble. There are a lot of reasons why, but one reason is beyond dispute: Wall Street greed.

The story is ugly. In the runup to the financial collapse, Goldman Sachs and Northern Trust were in charge of managing the Central States Pension Fund and making its investment decisions. Instead of doing what was best for workers and retirees, these financial giants invested those retirement savings in junk bonds and mortgage bonds issued by firms whose names today would fill a Wall Street Hall of Shame: Bear Stearns, Countrywide, IndyMac, and Lehman Brothers.

The crash of 2008 hit the Central States Pension Fund like a shiv in the ribs. In 15 months in 2008 and early 2009, pension assets managed by Goldman Sachs and Northern Trust dropped by 42 percent. That is more than twice the losses suffered by other multi-employer pension funds. And to add salt to the wound--the part that really twists the knife here--from 2005 to 2009, Goldman Sachs and Northern Trust charged Central States $41 million for the privilege of managing and wrecking their retirement fund.

Last month the Treasury Department rejected pension cuts to the Central States Pension Fund for the short term and bought these retirees some time. But this story isn't over. Unless the Senate acts, this pension plan will collapse within 10 years. Unless the Senate acts, hundreds of thousands of retirees whose pensions are currently on life support will lose those pensions entirely.

Tomorrow the Republicans, who control the Senate, are ready to act. Tomorrow they will bring a pension bill to the floor. Is it a bill to help save the 400,000 men and women of the Central States Pension Fund whose futures were decimated through no fault of their own? On that topic, the Republicans have nothing to say. Instead, the Republicans are bringing up a bill to make it easier--easier--for giant Wall Street financial institutions to cheat Americans out of their retirement savings.

The Senate will be voting to make it easier for shady financial institutions and unscrupulous financial advisers to mislead investors about the quality of the investments so those advisers can continue pushing lousy products, just like the junk bonds and mortgage funds that tanked the Central States pension plan. The Senate will be voting on whether to overturn the commonsense regulations the Department of Labor completed last month to protect Americans' hard-earned retirement savings from slick-talking advisers who push complicated products that give great payoffs to the advisers and terrible results for their customers.

Here is the problem: Because of loopholes in the law, it has long been perfectly legal for investment advisers to push products that drain away customer savings while they generate high fees, free vacations, cars, bonuses, and kickbacks for the advisers. These conflicts cost American families an estimated $17 billion every year. The new commonsense rule would put a stop to these practices. It is a pretty simple rule. It would ensure that financial advisers have to recommend products that are in the customers' best interests. No more pushing products just to generate high fees and payments for the advisers. No more free vacations. No more kickbacks. Why would anyone on Earth vote to overturn a rule designed to protect Americans from financial fraud? Why? Because it is an election year, so Senators and Congressmen have their hands out, willing to take every dime of Wall Street money they can get. Killing this new rule will cost American families $17 billion a year in lost retirement savings, but it will sure help to fill up the campaign accounts of the Republican Senators who vote for it. In the meantime, the clock keeps ticking for hundreds of thousands of Central States retirees, and the Republicans refuse to do anything.

The Republicans who control the Senate may think that tomorrow's vote will help their fundraising efforts. Even so, I will be voting no because we weren't sent here just to raise money for reelections. We weren't sent here to make money for Wall Street and their armies of lobbyists and lawyers. We weren't sent here to reward the too-big-to- fail banks that tanked our economy and then got billions of dollars in bailouts. We weren't sent here to make it easier for financial institutions to cheat people. The Republicans who run the Senate seem to have forgotten that. If they don't remember it soon, you can bet the American people will remind them in November.

Thank you, Madam President.

BREAK IN TRANSCRIPT

Source