State Senate candidate David Renzi today outlined a two-part plan to protect “everyday investors” who have seen the value of their retirement, college and personal savings plummet with the stock market, even as executives of the failing companies lined their pockets.
“Men, women and families have watched helplessly as Wall Street’s unprecedented collapse swallowed their hard-earned retirement, college and nest-egg savings, and threw their budgets and future financial plans into doubt,” said Renzi.
“Now, more and more people are finding they’ll have to work longer before retirement, or revise their college and personal savings plans to reach their goals,” said Renzi. “These people need protection as much as the large banks, brokerage houses and institutional investors who, in many cases, abused the trust of everyday investors and taxpayers.”
Renzi’s plan includes:
Protecting investors and their life savings
“Everyday investor” insurance ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ Modeled on the FDIC insurance program created in 1933 to protect savers and rebuild confidence in the nation’s banking system, Congress should create a program of baseline investment insurance to shield retirement, college savings and a modest personal investment account from a market collapse. Like FDIC, the insurance could be funded by either brokerage houses or individual stock issuers, with no additional cost to investors;
Truth in credit ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ Consumers opening their monthly credit card bills are facing a shock when they see that their credit lines have been restricted, or their rates increased, sometimes to unconscionable levels, when they miss even a single payment deadline. Congress should limit these so-called “default” rate increases and require plain-language disclosure of all terms and conditions of credit card offers.
Financial Products Safety Commission ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ The rise of exotic investments that promise generous returns lulled some investors into a false confidence. The federal government should monitor and review new financial products, and make recommendations based on their safety for the average investor.
Tax relief for retirement and college savings withdrawals ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ While many investors can afford to wait and hope their investments will recover, many retirees are required by law to draw down their now-depleted investment accounts, and parents of college-age children may have no choice but to withdraw funds now. Taxes and penalties on these withdrawals would amount to a double hit on these investors. State and federal officials should waive taxes and penalties for investors in these situations to help ease the pain of declining investments.
More executive accountability
“Golden parachute” tax ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ As stock prices fell, and federal regulators raced to prop up failing companies, CEOs and executives continued to receive multimillion dollar payouts. NY should impose a high level of taxation on such payouts and bonuses. Receipts should be used to fund investor protection programs, including the baseline insurance outlined above.
More “sunshine” on CEO pay ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ Investors should be able to access clear and understandable information about executives’ pay, benefits and bonuses. Right now, that information can be lost amidst complicated financial information that is contained in annual reports and not readily accessible to investors.
Truth in reporting ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ Companies have reported exaggerated earnings in order to bolster their stock price, only to revise the reports at a later date. Executives should be held accountable for bait-and-switch reporting, by requiring they forfeit any bonuses or extra pay that was based on the inflated or phony reports.
Increased fines for bilking investors ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ NY taxpayers spend hundreds of millions of dollars to help companies that promise to create new jobs, but the incentives often fall short of the job creation goals. In addition to forfeiting their taxpayer incentives, executives should be required to return bonuses and other extra compensation in these cases where their actions put taxpayers’ investment at risk.
“These reforms will help rebuild confidence in our economy, as well as provide concrete protection for small investors who cannot afford to lose their life’s savings because of missteps, errors and misjudgments of others whom they cannot control,” said Renzi.
“I look forward to working with state regulators, state and national elected officials to help the hard-working families of Central and Northern New York through this crisis, and create fresh, new ways to protect them in the future,” Renzi said.