Feds pressure American Airlines to save pensions

[densoo]

The problem isn't that they were borrowing from their pension funds throughout the late 80's and 90's, the problem is that they were using the run-up in dot-com stocks and other over-inflated stocks to cash out huge payouts to senior management in the form of bonuses.

Sad thing is that this was against the law for a long time. In the 70s they passed a law requiring adequate funding of pension obligations AND that they couldn't touch this money for anything but to pay the employees' pension.

During the dot com run up these invested pensions funds skyrocketed. Corporations went begging (and bribing) to Congress to allow access to the pensions for the purpose of investing in their own company to create jobs. Great sound bite. Congress allowed access to the funds--without restriction. That's when we saw the average CEO salary climb to 400 times his average employee, up from 30 times average employee in the early 80s.

Since then, it's just been a money grab.

 

[Full of LUV]

Sad thing is that this was against the law for a long time. In the 70s they passed a law requiring adequate funding of pension obligations AND that they couldn't touch this money for anything but to pay the employees' pension.

During the dot com run up these invested pensions funds skyrocketed. Corporations went begging (and bribing) to Congress to allow access to the pensions for the purpose of investing in their own company to create jobs. Great sound bite. Congress allowed access to the funds--without restriction. That's when we saw the average CEO salary climb to 400 times his average employee, up from 30 times average employee in the early 80s.

Since then, it's just been a money grab.

Don't have the time to look it up now, but in '99 - '00 DAL lobbied congress to allow them to put ADDITIONAL $500 MILLION INTO pension fund (ostensibly to avoid income tax but in the pension fund nonetheless) but congress said NO, it's profit, pay the corporate tax and do not prefund pension plans when times are good to level the load for when times are not.