Today Congressman Dan Maffei offered an amendment to the House Financial Services Committee that would change how pension funds and individual investors are treated by the Securities Investor Protection Corporation, or SIPC. After the Madoff firm collapsed last year, it was discovered that more than 30 local unions across Upstate New York had invested pensions funds with Madoff. Some funds were left more than 50% exposed, devastating the funds for nearly 60,000 hard working people. After Maffei offered the amendment and addressed the House Financial Services Committee, Chairman Barney Frank announced the Committee would hold a hearing on the matter on November 19th. Additional details on the hearing will be forthcoming.
Rep Maffei’s statement to the committee is below:
“I offer this amendment for myself a and with the gentleman from Minnesota, Mr. Ellison, with the understanding that we will offer and withdraw today – but we are eager to take Chairmen Frank and Kanjorski up on their offer to hold a hearing on issues surrounding the Madoff scheme and the Securities Investor Protection Corporation, or SIPC, and soon find a legislative way to deal with the problems we have identified.
“Currently SIPC, which advances money to investors who have lost due to failed brokerage firms, like Madoff, treats individuals and pension plans identically. Individuals are limited at $500,000, and pension plans are limited to $500,000 per plan. So, pension plans with multiple participants – as are many in my congressional district - and funds meant to support the retirement of hundreds or thousands of retirees are only eligible for the same investor protection as one individual. This inequity makes no sense.
“Union pension funds in and around my congressional district have been hit hard by the atrocious actions of Bernie Madoff and his now infamous Ponzi scheme. More than thirty Upstate New York labor funds were invested in Madoff. These labor pension funds invested over $300 million in Madoff, which has exposed nearly 60,000 retirees to devastating losses. Some funds were more than 50% exposed. Destroying so many retirement funds has meant real financial insecurity and hardship for many of my hard working constituents, amounting to postponed retirements and increased fees for enrollees and customers. Just one tangible result of these losses, I’d like to share: local plumbers in my district have nearly doubled the hourly rate they pay to their pension fund compared to what they were previously contributing just to keep it afloat.
“I’d like to ask unanimous consent to submit this list reported in the Syracuse Post-Standard of Central New York affected pension funds to the record.
I feel this is a matter of simple fairness. I’d again like to thank the chairmen for their willingness to hold hearings in the past and for their promise to address the issue in the near future. Before I ask to withdraw this amendment, I yield to the gentleman from Minnesota”
