We also learned today that U.S. Pension Benefit Guaranty Corporation lost at least $3 billion in stock investments during the last fiscal year through August, and invested a significant portion of its funds in mortgage-backed securities. The head of the PBGC, Charles Millard, will testify before the committee on Friday in Washington regarding the agency's financial problems.

Taxpayers subsidize 401(k) plans by $80 billion dollars annually. For a taxpayer investment of this size, we must ensure that the structure of 401(k)s adequately protects the nest eggs of participating workers.

At a minimum, we know that much greater transparency and disclosures in 401(k) investment policies are needed, to protect workers from “hidden” fees that could be eating deeply into their retirement accounts.

And with seniors poised to suffer the most from the current economic turmoil, we must suspend an unfair tax penalty for seniors who don’t take a minimum withdrawal from their depleted retirement accounts, like 401(k)s.  We’ll push to enact legislation based on a bill Rep. Rob Andrews recently introduced, so that seniors who have seen their retirement savings evaporate don’t get penalized for trying to build those savings back up.

At the hearing today, we heard from Roberta Quan, a retired school teacher from San Pablo, CA, who is also caring for her husband who has Alzheimer’s:  "The recent unstable financial crisis is having a devastating effect on my life.  A lifetime of savings in catastrophic decline is demoralizing. The bottom line is that I am retired and unable to re-earn lost funds."

Steve Carroll, a retired writer from Petaluma, CA, told us: "Our monthly budget has been severely depleted for life.  We still have our IRAs. But, as they are in mutual stock funds they are so far down in value that selling any of them right now, as the law requires of [my partner] Chuck, the loss would be an enormous percentage of the investment."

Current regulations require account holders of 401(k)-type account to withdraw a minimum amount of money every year after they reach 70 ½ years old. If seniors do not take out a minimum amount based on an Internal Revenue Service formula, they are subject to a 50 percent penalty. For instance, if an individual fails to withdraw $4,000, they would be assessed a $2,000 tax the next year.

Registered investment advisor Mark Davis told us that a temporary repeal of minimum required distribution rules could help some retirees.  On October 10, Rep. Andrews and I called on U.S. Treasury Secretary Henry Paulson to suspend the tax penalty for retirees who are forced to make withdrawals but want to have additional time to rebuild their retirement savings.

Other witnesses spoke about problems with the current retirement security system where individually directed 401(k)-type plans have become a worker's main retirement savings vehicle. Where investment decisions were once made by professionals managing a traditional pension portfolio on behalf of workers, the responsibility of picking the right investments and implementing retirement savings strategies are left up to an individual account holder.

The Education and Labor Committee passed legislation earlier in the year that would help workers shop around for the best retirement investment options by providing complete information on the fees taken from their retirement accounts. According to the Government Accountability Office, a 1 percentage point difference in fees can reduce retirement benefits by nearly 20 percent.

We started this investigation last week, as part of a series of hearings the House is conducting to investigate the causes of the financial crisis, and what additional steps are needed to protect homeowners, workers, and families.

Last week, Peter Orszag, the director of the Congressional Budget Office, told us that American workers have lost more than $2 trillion in retirement savings over the last fifteen months – an astonishing loss that could lead workers to delay their retirement.

Several experts also told us that workers closest to retirement could suffer the most from this financial tsunami.  But while the housing and financial crises are intensifying retirement insecurity, we also know that workers’ retirement savings have been declining for quite some time.  Rising unemployment, stagnating wages and benefits, and a shift away from more traditional defined-benefit pension plans have been making it much harder for workers to save for retirement while juggling other expenses.

Now, the number of investors taking loans on their 401(k) accounts is increasing. And hardship withdrawals are also increasing. T. Rowe Price estimates a 14 percent increase in hardship withdrawals just in the first eight months of 2008. And, all the signs point to an increased frequency of 401(k) loans and hardship withdrawals in the coming year.

As other committees’ hearings have revealed, many of the Wall Street titans responsible for this crisis have still escaped with their plush perks, lavish spa trips and golden parachutes intact. This is an outrage. For too long, the Bush administration anything goes economic policy allowed Wall Street to go unchecked.

As we look at how we can rebuild workers’ retirement savings and our nation’s economy, the Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.

Being able to save for retirement after a lifetime of hard work has always been a core tenet of the American Dream. We can’t allow the promise of a secure retirement for workers to become a casualty of the financial crisis.

Immediately after the plan was approved, Speaker Pelosi announced that the House would conduct a series of hearings to investigate the causes of the current financial crisis and what steps we should take next to protect homeowners, workers and families struggling today.

As part of that commitment, the Committee on Education and Labor today is holding a hearing to explore how this financial crisis is impacting the retirement security of American families.

Yesterday, the House Oversight and Government Reform Committee launched the first of many oversight hearings examining the toxic mix of corporate greed, recklessness, and deregulation that created this financial crisis.

During his testimony, Lehman’s CEO, Mr. Fuld, showed no remorse for his catastrophic mismanagement of the company. In fact, he repeatedly denied responsibility for running the storied Lehman Brothers investment house into financial oblivion.

He refused to admit that his own reckless management – and his industry’s success of keeping regulators at bay – directly contributed to this historic financial crisis that is costing taxpayers, shareholders, and the nation’s current and future retirees billions of dollars from their nest eggs.

All the while, he insisted on taking obscene multi-million dollar bonuses for his executive teammates.

Unlike Wall Street executives, American families don’t have a golden parachute to fall back on.
It’s clear that their retirement security may be one of the greatest casualties of this financial crisis.

The current financial and housing crises are stripping wealth from American families at a record rate.

A new poll just found that 63 percent of Americans are worried that they will not have enough savings for their retirement. Tragically, they may very well be right. Due to the collapse of the housing market and the financial crisis, trillions of dollars that Americans were counting on has been lost.

Americans were counting on much of this wealth for their retirement. Now it is gone – as is their ability to adequately fund their retirement.

Even before the current meltdown, middle-income families were losing ground due to the decline in middle-class wages over the last decade – making it harder for them to save for their retirement and family emergencies.

Retirement and financial experts now predict that retirees and older workers who rely on financial investments for retirement income may suffer more than any portion of the American population in the coming years.

According a survey released today by the AARP, one in five middle-aged workers stopped contributing to their retirement plans in the last year because they had trouble making ends meet. One in three workers has considered delaying retirement.

Now, the number of investors taking loans on their 401(k) accounts is increasing. And hardship withdrawals are also increasing.

T. Rowe Price estimates a 14 percent increase in hardship withdrawals just in the first eight months of 2008.

And, all the signs point to an increased frequency of 401(k) loans and hardship withdrawals in the coming year.

It makes sense that more Americans will be raiding their retirement accounts as they deal with rising unemployment and increasing costs of basic necessities.

Unfortunately, these drastic measures taken by workers today will have a long-lasting impact by significantly reducing account balances once these workers reach retirement age.

Over the past 12 months, more than a half trillion dollars have evaporated from 401(k) plans as a direct result of the crisis in the markets.

Some experts say that it will take as long as 3 years to recover market losses in 401(k)-style accounts – but only if the market turns around soon.

Just like consumer directed retirement plans, traditional pension plans are not immune from the financial crisis.

Although pension plans hire professional money managers and are required to be diversified, these plans will likely lose value as a result of the weak performance of the investment markets.

Sophisticated pension funds lost 20 to 30 percent of their value during the 2001 recession and took several years to overcome those losses.

We must keep our eye on these plans and I await further data on the health of our nation’s pensions.

While this crisis began on Wall Street, much of the financial burden will ultimately be borne by Main Street. And this did not happen overnight.

With the Republicans’ help and armed with their powerful lobbyists, Wall Street cunningly held off fair regulations by Congress, arguing that Americans would be better off if left to their own devices.

As Congress continues our investigations into this crisis, we cannot allow those responsible to emerge unscathed. The American people are paying the price of this go-go, Wild West approach to governing.

One cost will be the concern that our nation’s workers will not have sufficient savings to ensure a secure retirement after a lifetime of hard work. In the coming months, this committee will examine what measures may be needed to ensure a safe and secure retirement for workers, retirees and their families.

For starters, we know that 401(k) holders lack critical information about how their money is managed and what fees they pay.

I’m here to say right now, those days are over.

We must have more transparency in 401(k) investment practices. The Wall Street veil of secrecy must end.

I would like to thank all of our witnesses for joining us today. I look forward to their testimony.  

And I expect that we will be back here repeatedly until we can ensure greater security for the retirement of hard-working Americans.

America’s working families are hurting, and in need of real solutions to get our economy back on track. For starters, we must extend unemployment benefits for hundreds of thousands of out-of-work Americans whose current benefits are set to expire this weekend. Today, as the House considers a financial rescue plan to protect the credit that small businesses and families rely on, we will also vote to extend unemployment benefits to help workers cover their bills while looking for a new job.

But workers also need a long-term strategy to generate new jobs. Last week, the House passed a much-needed stimulus that would create millions of good-paying jobs by investing in our crumbling infrastructure – an investment that would get our nation back to work and prevent our economy from falling deeper into recession. Unfortunately for American families, Senate Republicans blocked the package.

This latest news underscores the urgent need to ease the pain of America’s working families and get our economy on the road to recovery.

Today is truly a momentous day for America’s current and future college students and families. Over the past two years, the Democratic Congress has charted a new direction to help make college more affordable and accessible for all qualified students. We’ve enacted the single largest increase in federal student aid since the GI Bill and key measures to protect federal college aid from turbulence in the nation’s credit markets – and all without costing taxpayers a dime. We’ve proven we can work in a bipartisan way to enact good public policies that make sense for students, for our economy, and for taxpayers.

Now, with this bill signed into law, we have taken the next critical steps toward restoring the promise of our nation’s higher education programs: To help all students gain access to a world-class college education. For the first time in years, students and parents will encounter a higher education system that is more consumer-friendly and that operates in the best interests of helping them pay for college. This law will help every student in this country get their fair shot at a college degree, and reclaim their piece of the American Dream.

After the Crandall Canyon mine disaster, the U.S. House of Representatives acted promptly to strengthen our nation’s mine health and safety laws by passing the S-MINER Act. This bill will require more vigorous oversight of retreat mining plans and activities.

Our committee’s investigation and other inquiries have shown that this tragedy was preventable. Actions by an irresponsible mine operator and an incompetent U.S. Mine Safety and Health Administration allowed this disaster to occur. Unfortunately, Secretary Chao has failed to hold anyone in MSHA accountable for the agency’s substantial failure to prevent the Crandall tragedy.

This anniversary reminds us of the significant risks miners still face while extracting the coal that meets our nation’s energy needs. The several mine tragedies that have occurred recently have been the result of weak laws, outlaw mine operators, and government agencies asleep at the switch. This is unacceptable. We must work aggressively toward a future where all miners can return home safely after their shifts. There is no better way to honor the lives of these fallen workers than to do all we can to prevent these kinds of tragedies from ever occurring again.

It is obvious from these events that existing rules and efforts by OSHA to prevent these explosions are not sufficient. The agency should immediately issue an emergency standard to prevent these explosive hazards. Failing that, Congress will act to ensure that the agency does its job.

It is clear from OSHA’s report that Imperial Sugar had a company-wide problem with sugar dust. Not even the deaths of 13 workers raised alarm bells with the company as proven by the dangerous conditions exposed at Imperial’s Gramercy, Louisiana plant more than a month later.

(In April, the U.S. House of Representatives approved the Worker Protection Against Combustible Dust Explosion and Fires Act (H.R. 5522). The bill, introduced by Chairman Miller and Rep. John Barrow (D-GA), would require OSHA to issue emergency rules to regulate combustible dust, like sugar dust, that can build up to hazardous levels and explode.)

MSHA's accident investigation report affirms the conclusions reached by our own investigation: Murray Energy should not have proposed the flawed retreat mining plan and MSHA should not have approved the plan. It is clear that Murray Energy is an outlaw company that recklessly endangered its employees’ lives. It is tragic that the deaths of six miners and three rescuers resulted from the reckless actions of a few individuals and inadequate MSHA oversight.

Especially troubling is MSHA’s conclusion that Murray Energy misled MSHA regarding bumps that occurred in March 2007.  In April of this year, I asked the Department of Justice to open a criminal investigation into this very subject.  The April referral was supported by significant evidence committee staff uncovered as they reviewed hundreds of thousands of documents, interviewed many witnesses, and deposed several individuals involved. I am confident that MSHA’s additional evidence in support of our criminal referral will provide further assistance to the Department of Justice in aggressively pursuing this criminal matter.

We will review MSHA’s investigation report and that of the forthcoming review of MSHA’s actions at the mine. The agency’s track record, however, leads me to believe that MSHA is not up to the task of protecting the health and safety of our nation’s miners. We must ensure that another tragedy such as this never happens again.

(In January, the House of Representative approved mine safety and health legislation that includes provisions to ensure more vigorous oversight by MSHA of retreat mining plans and activities. More information on the Supplementary Mine Improvement and New Emergency Response Act (H.R. 2768) »)

These pay increases aren’t just about helping workers provide for their families. Unlike tax breaks for the wealthy, the minimum wage increase for American workers will be spent locally, which is good for local businesses, large and small, and good for a struggling economy.

Democrats in Congress have been working to ensure that all Americans are able to share in the benefits provided by their hard work. We will keep working toward those goals in order to help grow and strengthen America’s middle class. So far, Congress has enacted a stimulus package to try to get our economy back on the right track, approved legislation to make college more affordable, and pushed efforts to lower energy and health care costs.

In the wealthiest country in the history of the world, it is an outrage that anyone who works full-time would still wind up in poverty. Democrats will continue to look at solutions that will help all Americans build a better life for themselves and their families.
 

As we state in our letter, it is disturbing that the Department of Labor is moving this proposal over the objections of career staff in the relevant health and safety agencies. Such career staff have the objective, technical expertise and experience to fully understand the proposal’s implications for workers.   

The Bush administration will stop at nothing to rush through a secret rule that will tie the hands of health and safety experts when responding to our nation’s critical health and safety threats.

But, that’s really no surprise at all. For nearly eight years, this administration has consistently failed to respond in a meaningful way to the real health and safety threats workers face while on the job. We’ve seen it when it comes to failing to protect workers who handle a dangerous artificial butter flavoring, ensuring that underground miners are sufficiently protected, and making sure construction workers are able to return home safe after their shift.