AFL-CIO exposes Schwab support for privatization

If stock brokerages are supporting the campaign to privatize Social Security, the AFL-CIO wants their customers to know about it.

The Charles Schwab Corporation is a current target for its backing of pro-privatization groups, and on March 31, the labor federation led demonstrations at Schwab offices in 70 cities, including Portland.

“If you want to know who’s going to benefit from privatizing Social Security, follow the money,” Oregon AFL-CIO President Tim Nesbitt told Portland protesters.

Schwab has helped finance the right-wing Cato Institute, a leading proponent of private accounts. Schwab officials were also among privatization advocates who met behind closed doors with the Bush Administration last fall.

And Schwab is one of about 40 corporations and business groups that have provided financial backing to the Alliance for Worker Retirement Security. AWRS was launched by the National Association of Manufacturers in 1998 to push for a diversion of Social Security revenues into private accounts that could be invested in stocks. The group is led by Derrick Max, the Cato Institute’s former head of government affairs. Schwab gave at least $5,000 to AWRS last year, and is expected to give $10,000 this year.

Schwab, headquartered in San Francisco, is the world’s largest discount broker. The company built its reputation as a brokerage company selling to small investors, including many working families, Nesbitt said. But supporting a plan to end Social Security’s guaranteed benefit is not in the interests of Schwab customers.

Spokespeople for Schwab reject the characterization of the company as a “supporter” of adding private accounts to Social Security. Charles Schwab spokesperson Sondra Harris said the protests are “misguided,” because the company has not taken a position on Social Security privatization. Harris confirmed that Schwab is a member of AWRS, but said that’s because Schwab wants to be kept informed of the debate.

Similar AFL-CIO campaigns against Edward Jones and Waddell Reed earlier this year led those companies to announce they were pulling out of AWRS.
Nesbitt, a Charles Schwab customer, said he’ll probably switch to Edward Jones.