May 20—Shareholders and workers angry that Charles Schwab Corp. is spending their money in support of Social Security privatization rallied outside the financial firm’s annual meeting in San Francisco Thursday—and then more than one-quarter of shareholders, 26 percent, withheld their vote for the financial firm’s board of directors. Withholding a vote is the same as a vote of no confidence in the board, including the chairman, Charles Schwab.

	Wearing masks of CEO Charles Schwab, hundreds of shareholders and workers protested Schwab's support for Social Security privatization at the corporation's annual meeting.

Shareholders also expressed their dissatisfaction with the firm’s leaders by passing—with 57 percent of the vote—a resolution requiring annual elections for all directors. The resolution passed even though Charles Schwab owns 19 percent of the company.

Before the meeting, rallying clients, union members, retirees, students and community activists urged the investment firm to “Stop the Double Talk” and end its support for the privatization of Social Security.

Schwab Belongs to Groups Leading the Attack on Social Security

With many participants wearing masks of Charles Schwab, investors and workers called on the company to withdraw from corporate coalitions promoting plans by President George W. Bush and California Gov. Arnold Schwarzenegger (R) to slash guaranteed retirement benefits for millions of workers. Shareholders dominated the meeting with challenges to Schwab’s advocacy of Social Security privatization.

Schwab claims it doesn’t take a position on Social Security privatization—but the firm maintains membership in groups leading the attack on Social Security. Schwab is a member of the Alliance for Worker Retirement Security (AWRS) and the Securities Industry Association (SIA), both key proponents of Social Security privatization. The AWRS and SIA represent investment banks, broker-dealers and mutual fund companies.

“Charles Schwab has a long track record of support for privatizing Social Security and our state pension funds,” Tim Paulson, executive director of the San Francisco Labor Council, told the crowd. “But the more people hear about privatization, the less they like the idea.”

More Than 1,000 Clients Write to Oppose Schwab’s Support for Privatization

At the rally, Schwab clients delivered 1,100 letters from fellow clients denouncing the company’s support for privatization. Several clients also attended the annual meeting to ask questions of Schwab about the firm’s backing of privatization.

Schwab supported Bush’s kick-off to his campaign for privatizing Social Security by participating in the president’s economic summit in December, Paulson said. Schwab also took part in a high-level White House strategy session discussing corporate support for the initiative, he said.

Financial firms, including those supporting Social Security privatization, such as Schwab, stand to gain billions of dollars in fees from managing privatized Social Security accounts while working families would be hit with cuts in guaranteed Social Security benefits and greater national debt. University of Chicago economist Austan Goolsbee estimates such companies as Charles Schwab could reap some $940 billion in fees over the next 75 years.

Social Security Privatization Would Cut Workers’ Benefits 20 Percent to 30 Percent

Working families are pressing lawmakers to stop Bush’s plans and campaigning to educate the public about the dangers of privatizing Social Security. The Bush plan would slash guaranteed benefits for young workers by $4,500 per year for workers making $37,000 in 2005 and $9,000 per year for so-called “high earners” who make $59,000 in 2005—even for recipients who did not choose private accounts. Social Security privatization would saddle the nation’s children with $4.9 trillion in new debt, mostly owed to foreign countries, over the first 20 years alone.

The plan also would worsen Social Security’s financing problems: Under Bush’s privatization plan, Social Security would run out of surplus revenues in 2030, 11 years earlier than now projected.

The rally followed a March 31 National Day of Action for Retirement Security, when thousands of working families and community activists rallied in more than 70 cities at the offices of Wall Street firms demanding that Schwab and others stop supporting privatization of Social Security.

“American voters know privatization is a flim-flam scheme—they already know that privatization means steep benefit cuts, an exploding deficit, huge bills for our children and grandchildren and more corruption on Wall Street,” AFL-CIO President John Sweeney told a National Day of Action crowd in Washington, D.C.

Grassroots protests by workers and investors have prompted several financial firms to drop out of the pro-privatization organizations.

In February, Edward Jones, which operates some 9,000 offices around the nation, dropped out of AWRS after a series of community actions at many of its offices. Shortly before grassroots mobilizations aimed at investment firm Waddell & Reed were set to take place in March, the company announced it was leaving AWRS.

Take Action Now!

·        Are you a client of Charles Schwab? Click here!

·        Send an e-mail to Schwab Chairman and CEO Charles Schwab and tell him “Don’t pick our pockets to line yours.”

More

·        Find out more about the May 19 action at the Schwab shareholder meeting.

·        Setting the Record Straight: Charles Schwab’s Support for Social Security Privatization.

·        See how Schwab puts its own interests first with privatization.

·        Read the March 31 letter from AFL-CIO President John J. Sweeney to Charles Schwab, chairman and CEO of the Charles Schwab Corp.

·        Read Jan. 14 letters from the AFL-CIO to Schwab executives, Charles Schwab and Executive Vice President William Atwell.

·        Download a flier: Charles Schwab: Don’t Pick Our Pockets to Line Yours.