Retirement accounts have lost $2 trillion so far

[CMF Newsman]

WASHINGTON – Americans' retirement plans have lost as much as $2 trillion in the past 15 months — about 20 percent of their value — Congress' top budget analyst estimated Tuesday as lawmakers began investigating how turmoil in the financial industry is whittling away workers' nest eggs.

The upheaval that has engulfed financial firms and sent the stock market plummeting is also devastating people's savings, forcing families to hold off on major purchases and even delay retirement, Peter Orszag, the head of the Congressional Budget Office, told the House Education and Labor Committee.

As Congress investigates the causes and effects of the meltdown, the panel pressed economists and other analysts on how the housing, credit and other financial troubles have battered pensions and other retirement funds, which are among the most common forms of savings in the United States.

"Unlike Wall Street executives, America's families don't have a golden parachute to fall back on," said Rep. George Miller, D-Calif., the panel chairman. "It's clear that their retirement security may be one of the greatest casualties of this financial crisis."

news.yahoo.com/s/ap/20081007/ap_on_bi_ge/meltdown_retirement;_ylt=AuOXrYzG_A82Ym7crMt6mQwDW7oF

[Warkitty]

Yeah....


Shame we didn't privatize social security and put THAT into this bundle while we had the chance. I'm sure THAT would have made a lot of retirees feel MUCH better.

[Justin Thyme]

I don't know about y'all but this is helping my retirement account. I'm still 10 to 12 years from retirement and I'm a little too heavy in money market funds. I'm going to wait until I start to see a rebound then move the money from the money market funds into some bargain stocks.

[legaltender]

Oct 8, 2008 9:12:49 GMT -5 Justin Thyme said:

I don't know about y'all but this is helping my retirement account.

Yeah, these are great times for retirement portfolios.

The angst is simply not quantifiable.

[Justin Thyme]

LT would you prefer to buy stocks at their price a month ago or at their price today?

Angst is for sissies.

[osrb]

I am getting ready to increase my 401k %. Now is the time to buy.

[gridbug]

With tragedy comes opportunity.

[legaltender]

Dow 9,500 is a potential buy opportunity.

I know no one whose retirement account has lately improved.

[Bryan Stone]

luckily I've never thought about saving for my retirement

turns out that was a good move

[LimitedRecourse]

Depends on where you saved your money.

[frayne]

Oct 8, 2008 13:14:46 GMT -5 @legaltender said:

Dow 9,500 is a potential buy opportunity.

I know no one whose retirement account has lately improved.

8500 now a good buying opportunity ?

[Bryan Stone]

Mason jars

[Justin Thyme]

Oct 9, 2008 18:10:03 GMT -5 frayne said:

Oct 8, 2008 13:14:46 GMT -5 @legaltender said:

Dow 9,500 is a potential buy opportunity.

I know no one whose retirement account has lately improved.

8500 now a good buying opportunity ?

8600 is on the way back up.

[Justin Thyme]

Oct 8, 2008 7:26:12 GMT -5 Warkitty said:

Yeah....


Shame we didn't privatize social security and put THAT into this bundle while we had the chance. I'm sure THAT would have made a lot of retirees feel MUCH better.

It would have made this future retiree feel much better. Current retirees wouldn't have had much of a chance to put much of their SS funds into the market. It would be a great buying opportunity now with those SS funds.

[osrb]

Hell I just increased my 401k deduction. I still have 25 yrs till retirement so I have a lot of time to wait for the market to rebound.

[legaltender]

Hard for retirees to divest stocks if they rely on a dividend check, secure in the belief pillars like Bank of America are always safe.

[Justin Thyme]

Depending on the stock it's sometimes a good idea to just hang on. The Dow is now back up to 9300. It has gained back almost half of what it lost over last week. The S&P500 has gained back most of what it lost.

[Warkitty]

I'm young enough to be risky. I didn't even look at what my portfolio was doing last week.

[spastikcomma]

My mom retired a couple of years ago and now she's worried that she may have to go back to work. She can't just sit on the money, she has to draw some out every month to live on.

[daworm]

What's her exposure to the stock market? If she's in the active draw down stage, her allocation should be much different than someone who's years away from retirement, and should be much more heavily into bonds with guaranteed, if low, returns. Market volatility shouldn't be a problem.

[spastikcomma]

I'm not sure, actually. She just told me she had lost money on her last statement and was afraid. She has a guy she trusts and has known for years handling it.

My mom's 58, doesn't have a mortgage or car payment. My dad works when he's in the country--missionary work is the retirement hobby he picked. They're not bad off. I feel for them because they're close to me. Imagine being too old or infirm to get a job and finding out that your retirement account was losing money.

[LimitedRecourse]

The following is a condensation of a series from
the Investor's Business Daily explaining "What

Caused the Loan Crisis":

1977: Pres. Jimmy Carter signs the Community
Reinvestment Act into Law.

The law pressured financial institutions to extend
home loans to those who would otherwise not qualify.



The Premise: Home ownership would improve poor

and crime-ridden communities and neighborhoods in

terms of crime, investment, jobs, etc.
Results: Statistics bear out that it did not help.

How did the government get so deeply involved in

the housing market?
Answer: Bill Clinton wanted it that way.

1992: Republican representative Jim Leach (IO)
warned of the danger that Fannie and Freddie were

changing from being agencies of the public at large

to money machines for the principals and the

stockholding few.

1993: Clinton extensively rewrote Fannie Mae and
Freddie Mac's rules turning the quasi-private

mortgage-funding firms into semi-nationalized
monopoies dispensing cash and loans to large
Democratic voting blocks and handing favors,

jobs and contributions to political allies. This

potent mix led inevitably to corruption and now

the collapse of Freddie and Fannie.

1994: Despite warnings, Clinton unveiled his
National Home-Ownership Strategy which broadened

the CRA in ways congress never intended.

1995: Congress, about to change from a Democrat
majority to Republican, Clinton orders Robert Rubin's

Treasury Dept to rewrite the rules. Robt. Rubin's

Treasury reworked rules, forcing banks to satisfy

quotas for sub-prime and minority loans to get a

satisfactory CRA rating. The rating was key to

expansion or mergers for banks. Loans began to

be made on the basis of race and little else.

1997 - 1999: Clinton, bypassing Republicans, enlisted

Andrew Cuomo, then Secretary of Housing and Urban

Developement, allowing Freddie and Fannie to get into

the sub-prime market in a BIG way. Led by Rep.

Barney Frank and Sen. Chris Dodd, congress doubled

down on the risk by easing capital limits and allowing

them to hold just 2.5% of capital to back their investments

vs. 10% for banks. Since they could borrow at lower

rates than banks their enterprises boomed.

With incentives in place, banks poured billions in loans

into poor communities, often "no doc", "no income",

requiring no money down and no verification of income.

Worse still was the cronyism: Fannie and Freddie

became home to out-of work-politicians, mostly Clinton

Democrats. 384 politicians got big campaign donations

from Fannie and Freddie. Over $200 million had been

spent on lobbying and political activities. During the

1990's Fannie and Freddie enjoyed a subsidy of as

much as $182 Billion, most of it going to principals

and shareholders, not poor borrowers as claimed.

Did it work? Minorities made up 49% of the 12.5

million new homeowners but many of those loans

have gone bad and the minority homeownership

rates are shrinking fast.

1999: New Treasury Secretary, Lawrence Summers,

became alarmed at Fannie and Freddie's excesses.

Congress held hearings the ensuing year but nothing

was done because Fannie and Freddie had donated

millions to key congressmen and radical groups,

ensuring no meaningful changes would take place.

"We manage our political risk with the same intensity

that we manage our credit and interest rate risks,"

Fannie CEO Franklin Raines, a former Clinton official

and current Barack Obama advisor, bragged to

investors in 1999.

2000: Secretary Summers sent Undersecretary Gary
Gensler to Congress seeking an end to the "special status".

Democrats raised a ruckus as did Fannie and Freddie,

headed by politically connected CEO's who knew how to

reward and punish. "We think that the statements evidence

a contempt for the nation's housing and mortgage markets"

Freddie spokesperson Sharon McHale said. It was the last

chance during the Clinton era for reform.

2001: Republicans try repeatedly to bring fiscal sanity to

Fannie and Freddie but Democrats blocked any attempt at

reform; especially Rep. Barney Frank and Sen.Chris Dodd

who now run key banking committees and were huge

beneficiaries of campaign contributions from the mortgage

giants.

2003: Bush proposes what the NY Times called "the most

significant regulatory overhaul in the housing finance

industry since the savings and loan crisis a decade ago".

Even after discovering a scheme by Fannie and Freddie to

overstate earnings by $10.6 billion to boost their bonuses,

the Democrats killed reform.

2005: Then Fed chairman Alan Greenspan warns congress:

"We are placing the total financial system at substantial risk".

Sen. McCain, with two others, sponsored a Fannie/Freddie

reform bill and said, "If congress does not act, American

taxpayers will continue to be exposed to the enormous risk

that Fannie Mae and Freddie Mac pose to the housing market,

the overall financial system and the economy as a whole".

Sen. Harry Reid accused the GOP ;of trying to "cripple the

ability of Fannie and Freddie to carry out their mission of

expanding homeownership" The bill went nowhere.

2007: By now Fannie and Freddie own or guarantee over

HALF of the $12 trillion US mortgage market. The mortgage

giants, whose executive suites were top-heavy with former

Democratic officials, had been working with Wall St. to

repackage the bad loans and sell them to investors. As the

housing market fell in '07, subprime mortgage portfolios

suffered major losses. The crisis was on, though it was 15

years in the making.

2008: McCain has repeatedly called for reforming the

behemoths, Bush urged reform 17 times. Still the media

have repeated Democrats' talking points about this being

a "Republican" disaster. A few Republicans are complicit

but Fannie and Freddie were created by Democrats,

regulated by Democrats, largely run by Democrats and

protected by Democrats. That's why taxpayers are now

being asked for $700 billion!!

If you doubt any of this, just click the links below and

listen to your lawmakers own words. They are condeming!

Postscript: ACORN is one of the principle beneficiaries

of Fannie/Freddie's slush funds. They are currently under

indictment or investigation in many states. Barack Obama

served as their legal counsel, defending their activities for

several years.

[Tsavodiner]

I would have saved that one for 7,000. wow.

[Felix]

*Sigh* I thought about editing Limited Resource's lengthy quote from Investors Business Daily, or his condensation of editorial series therein by Terry Jones. But I am lazy. So here is a link I found to one of the pieces, which blame the Democrats exclusively - no surprise that LR thought it worthwhile to post.

Evil Democrats Did It!

[coffeeshooter]

Words from GW Bush ca. 2002:

...Freddie Mae -- Fannie Mae and Freddie Mac -- I see the heads who are here; I want to thank you all for coming -- (laughter) -- have committed to provide more money for lenders. They've committed to help meet the shortage of capital available for minority home buyers.

....Homeownership is also an important part of our economic vitality. If -- when we meet this project, this goal, according to our Secretary of Housing and Urban Development, we will have added an additional $256 billion to the economy by encouraging 5.5 million new home owners in America; the activity -- the economic activity stimulated with the additional purchasers, the additional buyers, the additional demand will be upwards of $256 billion. And that's important because it will help people find work.

federalism.typepad.com/crime_federalism/2008/09/george-w-bush-c.html

[frayne]

Between Fannie and Freddy they only accounted for 20-25% of the sub prime loans. The problem was caused by greed in the financial sector. Both Dems and GOP are responsible for not providing oversight and insisting the regulators did their jobs.