Just in case anyone wants to know what I would like for Christmas...
Posted on 03/18/2006 2:30:27 PM PST by dervish
So the Lord High Executioner of Wall Street, Eliot Spitzer, now wants to make it "fraud" to help a poor person save for retirement. That's the message of the complaint filed this week in New York State court in Manhattan in The People of the State of New York against H&R Block. Those who have been following Mr. Spitzer for years now thought they'd pretty much seen it all, but for an example of leftist ideology run amok, this lawsuit sets a new standard of cynicism, denying those of modest means a first step into the system of capitalism and savings that is enjoyed with impunity by wealthy leftists such as Mr. Spitzer himself.
Mr. Spitzer complains that fees for the Individual Retirement Accounts offered by H&R Block ate up much of the potential savings. But as the complaint notes, "The median initial deposit to an Express IRA account is approximately $300." Most of the biggest low-fee IRA operators won't even let you in the door at that amount. The Web site for Vanguard, one of the largest mutual fund firms and one that markets itself on the basis of its low fees, says its minimum investment for someone wanting to start a new IRA is $3,000, 10 times the median account that H&R Block was starting.
Even at that level, Vanguard - remember, this is the firm known industrywide for its low fees - is going to charge you a $10 a year IRA custodial fee, a $10 annual "index fund maintenance fee" if you invest in an index fund, and the expense ratio for its mutual fund, which could amount to another $6 or so a year. These fees don't make the $15 account-opening fee that Mr. Spitzer is suing H&R Block over seem particularly abusive.
'snip'
(Excerpt) Read more at nysun.com ...
Meanwhile, Mr. Spitzer doesn't make clear in his complaint why he, rather than the free market, should be setting H&R Block's fees. Or why, even if government intervention were necessary, fee-setting for these accounts should be his responsibility rather than that of the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Treasury Department's Office of Thrift Supervision, or the federal Comptroller of the Currency. Maybe Mr. Spitzer wants to set the fees so low that no one will offer IRAs to poor people. That'd be the consequence of his lawsuit making it "fraud" to help poor people save for retirement.
'snip'
menace to New York ping
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
The story on the day this story broke, if I recall correctly (and in this rare case, I do!) was that 85% of the accounts lost money. These two statements, as I read them, are mutually exclusive. Math is math.
That being said: It's clearly irrelevant whether H&R Block made or lost money on this program. It's irrelevant whether Fidelity (or whomever) will or will not allow a small-dollar IRA acount to be opened. There are many, many institutions who will allow a $300 no-fee IRA to be opened. I seriously doubt H&R Block was trying to sell a program that they lost money on; but what I doubt is also irrelevant!
A perfect example of why trust fund kiddies shouldn't be able to profit off the sweat and toil of their parents.
...............
Sorry, I think you have your facts wrong. But if you have any links I'll take a look. From the posted article:
"Mr. Spitzer also has a beef with H&R Block in respect of the investment options it gave its customers. "Unlike many IRAs, which offer various investment options such as stocks, bonds, and mutual funds, the Express IRA has only one investment option, an FDIC insured money market account that typically pays an interest rate less than the rate of inflation," Mr. Spitzer's complaint charges, going on to say, "It is common knowledge that money market accounts are a poor vehicle for retirement savings." Mr. Spitzer goes on to quote a Wall Street Journal article to that effect.
Unless the US federal Government defaulted which I think I'd know about, the accounts did not lose money.
H&R Block may be willing to foot the loss in exchange for goodwill and attracting business.
Maybe the Leftists have declared a war on poor people? Mr. Spitzer's plan will certainly take away an option that poor people have for investing for their future.
It does remind me of a plan Mont. Co, MD passed (and is now in court). They want to punish mortgage lenders who charge "too high" interest rates for house loans. Of course, that applies to all of the lenders who will give high risk loans to the poor. And, no surprise, most of the lenders who do give high risk loans will stop lending in the county if this law is upheld.
I guess low income people don't need retirement accounts or home ownership; "the gov't" will take care of them.
(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")
It depends on what they did - if they really failed to disclose the fees and if the fees were more than the interest as has been alledged in other stories then this would appear to be legitimate prosecution.
If Spitzer lied about what H&R Block did that's another story.
http://www.freerepublic.com/focus/f-news/1596832/posts
From the above link, sourced from Yahoo news.
"Spitzer said that H&R Block opened more than half a million Express IRA accounts in the last four years. He said 85 percent of customers who opened the accounts paid H&R Block more in fees than they earned in interest. More than 150,000 customers closed their accounts, incurring additional undisclosed fees and almost $6 million in tax penalties, Spitzer said."
There is also this
"H&R Block had run into legal trouble even before the announcement of the IRA suits. In December, the company reached a $62.5 million settlement for four class action claims over high-interest loans based on tax refunds. Earlier that year, a federal judge in Chicago nixed a $360 million settlement over similar claims, saying the proposed settlement was insufficient."
And this
"A class action suit filed by a Boca Raton, Fla., lawyer against tax preparation giant H&R Block alleges that the company fraudulently marketed money-losing individual retirement accounts to low-income clients across the country.
The suit, whose lead plaintiff is a Broward County resident, claims that the Kansas City, Mo.-based company made millions in profits selling the IRA products even as clients' IRA assets were depleted by fees and commissions. It alleges breach of contract, unjust enrichment, breach of fiduciary duty and violations of Missouri's Merchandising Practices Act. "
okay your point was that they lost money in fees, not principal. Now I understand you.
The fees were $15 to open, $10 per year, and $25 to close.
The issue of losing money turns on the amount invested and how long it is kept in. Does Spitzer want to argue that investors were encouraged to withdraw their money? Not plausible.
Money markets are not just liquid they are safe and guarantee principal unlike stocks and bonds. If they had been permitted to buy stocks and lost money, Spitzer would be out there yelling that they were duped on the risk.
Yes, that suit by William Lerach is mentioned in the article:
"They'd be doing all New Yorkers a favor, that is, except for the trial lawyers who fund the Spitzer campaign and those of other politicians, mostly Democrats, in the Empire State. One of the most prominent among those trial lawyers, William Lerach, happened, the same day Mr. Spitzer moved, to file what the Wall Street Journal described as "a complaint seeking class action status in U.S. District Court in Missouri alleging H&R Block breached fiduciary duties and used deceptive and unfair trade practices by steering clients to the Express IRA accounts." Funny how Mr. Lerach, who didn't return our reporter's calls yesterday about whether he had gotten an advanced heads-up from Mr. Spitzer, managed to move so fast on this one. Don't count on Mr. Lerach filing a similar suit against Amalgamated Bank - they are his client. And don't count on Mr. Spitzer's zeal for low fees to extend to the multi-million dollar profits of the trial lawyers - they are his campaign donors. No, the lawyers and the politicians do okay for themselves all around - it's H&R Block's shareholders and the poor who wind up the losers in Mr. Spitzer's latest sally."
I don't know , the Chicago suit was filed before Spitzer and claims that the interest rate was less than 1% in most cases so any investment up to $1000 was guarenteed to lose money but H&R didn't disclose the fees.
The truth? Who knows?
His campaign commercials focus on how he will be the champion of the poor, the dispossesed, the taken advantage of, ad nauseum. In fact all he has done is to make more New Yorkers more dependent on social welfare pgms to their own detriment.
It's been a long time since I've seen such a blatant appeal to people's lowest and basest instincts --Spitzer is nothing more than a charlatan and a demagogue
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