Headline Writers Who Can't Read

The New York Sun needs to take a second look at their reading comprehension standards:

Windfall Likely on Wall Street from Bush Plan

read the headline, but the body of the story (about plans to create private, individual, Social Security accounts) clearly belies it:

in a report released yesterday, an industry group analyzed the potential fees associated with private accounts and concluded "the impact on Wall Street will be limited."

...A senior official of a major investment banking firm yesterday echoed the report, saying Wall Street has little financial interest in private Social Security accounts.

"We do not have a business interest in that proposition. ...We have no skin in that game," said the vice president for communications and public affairs at Merrill Lynch, Jason Wright.

The perception that the proposed accounts would be a financial boon to the investment industry is "one of the greatest myths" in the Social Security debate, he said during a panel discussion of the state of the middle class organized by the Drum Major Institute.

"You really can't make money managing little accounts," he said during the discussion at the National Press Club. Administering such accounts "is more complicated than people think," given costs such as printing individual statements, creating individual computer access, and other client services, he said.

In an interview following his remarks, Mr. Wright told The New York Sun that Merrill Lynch officially has "no position" on the accounts. He said the government should create more incentives for Americans to save for retirement.

"Our view is that you have to do more than Social Security. Any policy that incentivizes savings is in the country's best interest," he said.

In its report, subtitled "No Free Lunch for Wall Street," the Securities Industry Association concluded that the accounts would not be a "bonanza" to Wall Street, because the types of funds that the accounts will be invested in will likely be limited to a few index funds with low fees.

The industry group based its assumptions on a system currently in place for federal employees and military personnel called the Thrift Savings Plan. Under that plan, workers can choose from five index funds - three equity index funds, one mixed bond fund, and a U.S. Treasury bond fund.

....If the accounts are invested in funds similar to the Thrift Savings Plan, the association's report estimated that the fees would be just over 10 basis points, or 0.101% - a tenth of the fees on mutual funds overall.