Wall Street WARZONE
Wall Street’s “Rashomon:” 6 Kabuki Players Have America “On Trial,” While Siphoning 30% of the Profits from $12 Trillion in Your Retirement Funds
by Paul B Farrell, JD, PhD
| Discuss | Print | 4/30/2010

Today, 70% of all securities are controlled by pension and retirement fund managers. So it becomes far less important for fund managers to bother dealing directly with individual investors. Instead Wall Street simply targets the corporate insiders — human resources managers, inhouse plan managers and, yes, the CEOs — all the folks who actually manage the company’s pension and retirement plans, 401(k) and 529 plans … then shmooze, hustle, play a round of golf and generally manipulate the key insiders. The workers investing in the plan are less important than the huge fees fund companies like Fidelity generate from managing 401(k) plans.

Though often challenged, Wall Street never passes along any economies-of-scale, instead, the bigger a fund gets the more profits they pocket for themselves, through sales perks to sign on cushy management contracts, or just paying themselves bigger salaries and bonuses. Why this bizarre game? Greed! Wall Street’s fund industry is obsessed with increasing the assets managed in these retirement plans—because managing more assets give them a self-serving “right” to charge higher operating fees, even though increased assets mean little additional cost. But it does mean greater profits and bigger income for insiders.

This drama reminds us of Akira Kurosawa’s 1950 film “Rashomon.” Regarded as one of the greatest of all time, it is at once an ancient Kabuki morality play and a tense modern psychological courtroom drama. We watch a rape and murder unfold through the eyes of several witnesses, each swearing they saw what “really happened.” We “see” the action in a forest; through the eyes of a Woodcutter, Priest, Samurai’s Wife, the accused Bandit, even the Samurai speaks through a Medium. But as “the facts” unfold, the lies and contractions of biased minds are exposed, and the truth becomes increasingly obscure. In the end, we are left still wondering: What happened? (More)