Wednesday, September 17, 2008

AIG Holds Pension Funds for Milliions of Public Service Employees in Many States

News of the AIG federal bail out only scratches the surface of what is going on. Millions of schoolteachers, firefighters, and other government employees have 403bs managed by AIG.

The Jacksonville Police and Fire Pension Fund inaugurated a lawsuit against AIG in May of lying. According to Reuters, the fund “accuses New York-based AIG of repeatedly but falsely assuring investors that its risk management and diversification insulated it from credit market turmoil in 2007. Credit market problems led AIG to suffer a $7.8 billion first-quarter loss.”

Google links suggest that the California Public Employees Pension Fund, the largest in the country, was considering suing AIG for similar reasons.

MSNBC reporters and online sources are assuring people that FDIC savings and checking accounts are safe. Retirement funds typically are stock funds that are not insured by the FDIC. This misdirection by newscasters is not helpful; it does not answer the questions that people are asking: Are my AIG retirement funds safe?

AIG representatives are not returning phone calls. My did not, and I see posts on the Internet that other clients are getting the same treatment.

I am trying to move my funds into a different fund. The representative warned me that it is going to take time. Tens of thousands of people are also rolling over their funds from AIG into other accounts.

With the economy in meltdown, I wouldn’t be surprised if a lot of us wind up, like those poor Enron employees, with nothing. My mother is reminiscing about the great depression. Her father had six children and was jobless. The landlady kept track of missed rent, and the owner of the deli down the street provided food on on credit. “What can people do when no one has money?” my mother asks.

The end of defined payment pension funds and the inauguration of IRAs, 401ks, and 403bs, is turning into a huge swindle of hard-working Americans. We worker ants have routinely been salting away a percentage of our paychecks, forgoing cars and vacations, to save money for our old age.

On the other hand, some people bought homes they could not afford based on the fast talk of mortgage loan officers who promised that everything would turn out right in the end. These loans were made out of the funds that we worker ants were plowing into our retirement funds.

Now, those who wanted to live beyond their means are asking the federal government to bail them out. I include in this category the person who was working an ordinary job and wanted a 2,000-square-foot home, with swimming pool, hot tub, and two-car garage, purchased at 105% credit with escalating interest payments. I also include in this category investment bankers and brokers who have have been living the high life in New York and other investment capitals, looking out on cityscapes from million-dollar lofts and driving Ferraris. At least part of this money is that of those of us who have slogged through jobs we didn’t really like.

We did what we were supposed to do. We fulfilled our obligations. We lived responsibly. Now the rules of the game are changing. We are being told that it's too bad things didn't work out like we were promised they would (at least, not for us); so sorry that you lived modestly and sacrificed.


Sylvia K said...

I can feel, hear and understand your anger and frustration. I can only hope things work out for you. Believe me I know what it is to live with a tight string, my son and I both do it and it's only because it's the two of us that we're able to do as well as we do. Alone, I'd be doing good to live in one room. Not that it helps, but I'm holding good thoughts for you.

Anonymous said...

In my humble opinion the global financial turmoil is caused by the availability of easy money which forces up prices to levels that ordinary folk can ill afford. If legislation limited mortgage lending to 75% of house purchase price then people would learn the thrift of having to save for a substantial deposit before home ownership. This would keep prices down for first time house buyers and the ripples would be reflected in the higher end of the market.

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