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An Executive Issue: Investment of Retirement Plans
May 1, 2008
Jim Kaitz
From the May 2008 edition of AFP Exchange magazine, which coincides with AFP's Global Corproate Treasurers Forum: www.afponline.org/gctf
Dear AFP Members:
In the remaining months running up to the presidential election, policy makers are not likely to pay much attention to retirement plans. But the bursting of the housing bubble and the meltdown in the structured finance market could have an impact on the investment of retirement plans.
Key members of Congress are looking at ways to limit systemic risk and avoid a repeat of the credit crisis. Rep. Barney Frank (D-MA), Chairman of the House Financial Services Committee, has stated that much of the damage to financial markets over the past several months can be traced to a lack of adequate regulation.
The President’s Working Group on Financial Markets recently issued a policy statement that primarily called for private sector action, but did include recommendations for greater “oversight” of some activities by regulators. By issuing the policy statement, the administration is signaling a first step, with further action to follow.
Some opinion leaders argue that the markets should be allowed to work through the current difficulties without any direct government action. Others point to actions by the Federal Reserve, including allowing investment banks to borrow from the discount window for the first time, as proof that government needs to act to prevent further deterioration in the capital markets.
This debate and the related issue of whether the financial markets are adequately regulated are likely to be central over the next several months.
The way these questions are answered may have an impact on the availability and viability of various investment vehicles. It could also engender further scrutiny of pension plan investment policies and risk management by plans.
Jim Kaitz
President and CEO
Association for Financial Professionals
Copyright © 2008 Association for Financial Professionals. All Rights Reserved.
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