Fearing that the business supporters of President Bush's proposed Social Security overhaul will greatly outspend opponents, the nation's unions are trying to even the sides by pressuring financial companies and trade associations to drop out of the coalition backing Mr. Bush's plan.þþThe A.F.L.-C.I.O. has already persuaded two investment firms, Edward Jones and Waddell & Reed, to quit one of the groups backing the Bush plan, and it has set its sights on two others, Charles Schwab and the Wachovia Corporation.þþThe unions are also pressing the Securities Industry Association to withdraw from Compass, the main business coalition backing personal Social Security accounts. Labor is claiming credit for persuading the Financial Services Forum, a group of 20 companies, to announce on Monday that it was leaving Compass, although the forum's leaders insist that union pressures had nothing to do with their decision.þþÿWe're seeking to pull Wall Street money out of the debate,ÿ said Bill Patterson, director of the A.F.L.-C.I.O.'s Office of Investment. ÿWall Street's covert funding of the drive to privatize Social Security is a conflict of interest because they stand to gain billions of dollars in fees.ÿþþDerrick Max, executive director of Compass, the Coalition for the Modernization and Protection of America's Social Security, said labor was using improper tactics, suggesting that some unions have threatened to pull investments from companies unless they complied with labor's demands. With $400 billion in pension funds, unions bring considerable financial leverage to the debate.þþDescribing the tactic as ÿthe Tonya Harding approach to politics,ÿ Mr. Max said, ÿThey can't seem to beat us on the ice, so they're clubbing us on our knees.ÿþþMr. Patterson denied that unions had threatened to shift funds, partly because moving funds for political reasons might be viewed as a violation of the fiduciary duties owed to pension fund members.þþLabor's campaign has not hurt his effort's financing, Mr. Max insisted. He said that when Edward Jones announced that it was dropping out of the Alliance for Worker Retirement Security, several companies responded by calling him, joining his group and making contributions.þþUnions have embraced numerous tactics in the Social Security fight - protests in front of investment firm headquarters, strongly worded letters to chairmen, and a torrent of phone calls and e-mail messages from union members. In a letter to the chairman of J. P. Morgan Chase, the A.F.L.-C.I.O.'s president, John J. Sweeney, wrote: ÿThe push to privatize Social Security creates a conflict of interest between America's financial services industry and the investing public it serves. Social Security privatization is a risky scheme for America, but a sure bet for the financial services industry.ÿþþGreg Gable, a spokesman for Charles Schwab, said labor's campaign was misguided. ÿSuggesting that we're supporting privatization is wrong,ÿ he said. ÿIt's not true because we're not a proponent of one approach or another.ÿþþGreg Valliere, chief strategist for the Stanford Washington Research Group, said labor's efforts had helped to mute Wall Street's voice in the debate. ÿThey have been quite successful,ÿ he said. ÿThey have intimidated a lot of financial service firms.ÿþþMr. Valliere said it was not surprising that these firms were so vulnerable to pressure. ÿFinancial services firms don't want to be real visible on this issue because you're bound to antagonize a major chunk of your clients,ÿ he said. ÿThere are many Democrats who are clients of these firms, and there are many who oppose the Bush plan.ÿþþElizabeth Varley, director of retirement policy at the Securities Industry Association, said her group had no intention of bowing to the A.F.L.-C.I.O.'s pressures. ÿOur position is we think Social Security needs to be reformed sooner rather than later,ÿ she said. ÿI don't want to say what they're doing is unfair. They have a right to express their opinion, and we feel we have a right to express ours as well.ÿþþþ
Source: NY Times
