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Cypen & Cypen
JANUARY 19, 2006

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001


Bloomberg News reports that Wall Street firms will pay their New York City workers a record $21.5 Billion in bonuses for 2005, after profits at companies like Goldman Sachs and Lehman Brothers reached an all-time high. Average bonuses for the City’s 174,000 investment bankers and other securities industry workers will rise 10%, to a record $125,500.00. Total bonuses surpassed the previous peak of $19.5 Billion set during the bull market in 2000. Bankers who help arrange acquisitions, Wall Street’s most profitable business, got the biggest bonuses -- maybe as high as $15 Million. Compensation rose as earnings at Goldman, Lehman, Morgan Stanley and Bear Stearns jumped 15% to $14.6 Billion. Trading revenue surged 20% for the year.


In June, 2005, the Reason Foundation published a study entitled “The Gathering Pension Storm: How Government Pension Plans Are Breaking the Bank and Strategies for Reform.” (Reason Foundation says its mission is to advance a free society by developing, applying and promoting libertarian principles, including individual liberty, free markets and the rule of law.) Needless to say, the study is critical of defined benefit plans for employees of state and local government, and calls for replacement of DB plans with 401(k)-style defined contribution plans. Now, National Association of State Retirement Administrators has responded to the Reason Foundation’s study. According to NASRA, the Reason Foundation recommends terminating DB plans for public employees because, Reason contends, it is inherent in DB plans that policy makers, operating solely in their own political interests, will approve higher pension benefits for their own selfish, short-term political gain while deferring the cost of those benefits to future generations. (Of course, in Florida, by constitution and statute, such shenanigans are not possible.) NASRA believes the Reason study makes its case by (1) distorting the true financial condition of public pensions in general; (2) mistakenly extrapolating a handful of public pension problems onto the entire public pension community; (3) failing to consider the many negative consequences that would result from terminating DB plans; and (4) advancing arguments that reflect an incomplete understanding of public pension issues. Rather than terminating DB plans (which would have negative consequences for all stakeholders), solutions are available to the public pension problems cited by Reason, chiefly by working through normal political processes at the state level. NASRA’s complete 25-page response can be accessed at


According to a front-page Wall Street Journal story, Howard Baugh grew up next door to Martin Luther King, Jr., and joined the Atlanta Police Department in 1953 at its twelfth black recruit. He is a veteran of the Civil-Rights demonstrations that roiled Atlanta -- and of a long struggle against bigotry within the police force itself. Now 81 years old, Mr. Baugh, together with a group of fellow officers who crossed the color line decades ago, is pressing the State of Georgia to grant him the same pension benefits as his white counterparts from that era. Mr. Baugh and other African-American retirees say that early in their police careers they were blocked from participating in a state-backed supplemental retirement fund because of their color. As a result, Mr. Baugh says he receives about $700.00 less each month than comparable white officers. As many as 200 other retired black officers are in the same boat. For four years, the aging retirees have petitioned state legislators for redress. Until last week, lawmakers have replied that because of Georgia’s sluggish economy, the state could not handle the cost of providing benefits to the excluded officers. The state estimated that if they were added to the fund, there would be an unfunded liability of $20 Million. Now, with the state’s economy improving and Republican Governor Sonny Perdue last week proposing $1.2 Billion in additional spending for the fiscal year that starts July 1, the retirees are renewing their push. Long time coming.

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Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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