URGING CONGRESS TO ADOPT H.R. 710 TO ACCOMPLISH THE DUAL OBJECTIVES OF INJECTING ADDITIONAL CAPITAL INTO THE NATIONAL BANKING SYSTEM WHILE SIMULTANEOUSLY PROVIDING RELIEF TO PUBLIC EMPLOYEE DEFINED BENEFIT RETIREMENT SYSTEMS
WHEREAS, financial markets experienced a deep and broad correction in 2008 which impacts even well diversified investment portfolios; and
WHEREAS, the restoration of a healthy and functioning banking system and recapitalization of U.S. banks is a necessary pre-condition to any recovery; and
WHEREAS, state and local governments and their defined benefit retirement systems are under financial pressure as a result of the current economic environment; and
WHEREAS, approximately ninety percent of state and local government employees participate in defined benefit retirement systems; and
WHEREAS, recent under-performance of financial markets has resulted in increased funding obligations for public retirement systems; and
WHEREAS, H.R. 710 proposes to channel funds from long term and readily accessible sources of private capital - public pension funds - to banks which can leverage that capital in ways which support federal efforts to right the economy; and
WHEREAS, H.R. 710 proposes to secure additional Tier I capital for the United States banking system by providing authority to the Secretary of the Treasury to guaranty certain new preferred stock investments made by public retirement systems acting in a collective fashion; and
WHEREAS, the target rate proposed by H.R. 710 is a federally guaranteed investment return of 8.5 % for new issues of preferred stock; and
WHEREAS, H.R. 710 will help to offset investment losses suffered by public pension funds, which otherwise must look to local governments and taxpayers, already strained by the current economic crisis, to cover their obligations to millions of public employees.
NOW, THEREFORE, BE IT RESOLVED, that the U.S. Conference of Mayors urges Congress to adopt H.R. 710 or similar legislation which would accomplish the simultaneous objective of providing relief to financial institutions, public pension plans, and their sponsors.