[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Extensions of Remarks]
[Pages 757-758]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 RETIREMENT SECURITY FOR ALL AMERICANS

                                 ______
                                 

                          HON. DAVID E. BONIOR

                              of michigan

                    in the house of representatives

                      Wednesday, February 6, 2002

  Mr. BONIOR. Mr. Speaker, in the past several weeks, we've witnessed 
how rapidly a company can fall from prosperity into bankruptcy. Due to 
deceptive accounting and bad investments, Enron's road from being the 
country's seventh largest company to declaring bankruptcy was one of 
the fastest in history. In roughly a year, the value of Enron's stock--
once considered a sure thing--plummeted from a high of $90 to just 
pennies.
  The collapse of Enron has reminded us of one thing we already knew: 
the stock market can be volatile and unpredictable. It should confirm 
for us another truth: we shouldn't put our retirement security solely 
in the hands of the market.
  The most tragic part of the Enron story is the loss of retirement 
savings for thousands of employees and retirees who had invested 
heavily in their employer's stock. These investors lost billions of 
dollars in pension plans that were, on average, comprised mostly of 
Enron stock. Some retirees saw all of their million-dollar life savings 
disappear in a matter of days--forcing them to sell their homes and 
other family assets to support themselves in their later years.
  The Enron case has proven to us that what looks like a good 
investment--even what stockbrokers and analysts insist is a ``strong 
buy''--can be a disaster in disguise. Current and former Enron 
employees had every reason to trust that their investment in their 
employer's stock was going to pay off. The company reported quarter 
after quarter of rising profits and just a month before the company 
reported a $638 million quarterly loss, its chairman was reassuring 
investors that Enron's third quarter report was ``looking great.'' 
Investors had no way of knowing that their employer's stock was about 
to begin a rapid decline that would wipe out their life savings.
  It is deceptions like this, and illusive accounting practices that 
shield a company's true value, that remind us of the dangers of 
privatizing Social Security. In the last few years, there has been a 
continued push for changes in the Social Security program that would 
allow people to invest a portion of their Social Security benefits in 
the stock market. Yet the collapse of promising companies like Enron--
whose case proves that getting good investment advice is not always 
enough--has illustrated the dangers of this proposal.
  Furthermore, not every economic downturn comes with warning signs. 
Events happen, like the attacks of September 11, that rock sectors of 
our economy overnight. Investing in the stock market is always a 
gamble--and it's a gamble that we shouldn't make with Social Security. 
For generations, Social Security has been the foundation of a secure 
retirement for every American--that's why it's called Social Security. 
We should not take any actions which will threaten the stability of 
this foundation.
  The fall of Enron has also taught us that we do not have adequate 
laws on the books to protect the pensions of private employees. When 
Congress enacted our pension laws in 1974, 401(k) plans did not exist. 
Today, one-third of the workforce has a 401(k) plan. Often, these plans 
include a 50 percent employer match of a worker's investment, and some 
companies, like Enron, offer this match in the form of company stock. 
But Enron's workers didn't know the true financial health of their 
company, and many did not act to diversify their stock portfolios when 
they had the chance. It is party because the 401(k) plans of Enron 
employees were invested heavily in Enron stock--and because a change in 
plan administration prohibited employers from selling this stock during 
crucial days when the price was falling--that so many workers lost 
their life savings.
  This is more than unfair--it is unconscionable. We cannot sit back 
and do nothing while corporate executives run off with the life savings 
of their loyal employees. This week, I am introducing legislation to 
promote the diversification of 401(k) plans and help prevent another 
Enron disaster. My bill will require that companies and 401(k) plan 
administrators fully and accurately disclose the economic health of 
401(k) investments. In addition, it will ensure that workers receive 
information about their options to diversify their investments. 
Employees should never be kept in the dark about the financial health 
of their retirement plans or any measures they could be taking to

[[Page 758]]

protect their investments. This is about more than getting a return on 
investments--it is about the right to retire financially secure.
  In the days and months ahead, I will be fighting to ensure that the 
retirement security of working Americans is protected. If we've learned 
anything from Enron, it is that we cannot afford to entrust our 
retirement savings to the whims of the stock market. We know enough 
about what went wrong to protect Social Security from the dangers of 
privatization and reform our pension laws. This is not the first time 
companies have closed up and taken their workers' pension plans with 
them. This has happened with other corporations--and much smaller 
businesses.
  We save all of our working lives with the expectation that we will be 
able to retire with peace and dignity. Enron employees--and many 
others--have been robbed of this promise. We can't let that happen 
again. We need to take a stand for these workers.

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