Former House Speaker Boehner and Rep. Crowley Talk Union Pension Crisis

The influential former lawmakers are using their combined bipartisan stature to advocate for progress on the union multiemployer pension funding crisis.

Art by Melinda Beck


Former House Speaker John Boehner and former Congressman Joe Crowley recently announced the launch of the Retirement Security Coalition.

According to Boehner and Crowley, who hails from New York and served as a Chairman of the House Democratic Caucus during his time in Congress, the Coalition is made up of a diverse group of employers, labor unions and policy experts “dedicated to finding a common-ground solution to the multiemployer pension crisis in America.”

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The two announced their new advocacy effort shortly after the Ways and Means Committee of the U.S. House of Representatives marked up and voted along party lines to advance a bill formally called the Rehabilitation for Multiemployer Pensions Act, setting the stage for full floor consideration and the amendment process. The bill has also been colloquially referred to as the Butch Lewis Act, recognizing the late former president of Teamsters Local 100.

As passed by the committee, the Act would provide funds for 30-year loans and new financial assistance, in the form of grants, to financially troubled multiemployer pension plans. According to the text of the legislation, the program is designed to “operate primarily over the next 30 years.”

During the committee debate, Democrats, led by current Chairman Richard Neal of Massachusetts, generally voiced strong support for the Act. They suggest that the dire financial situation faced by some multiemployer pension systems is chiefly due to the Great Recession and long-lasting market challenges that have particularly harmed manufacturing and other blue-collar industries. They say economic conditions in the last two decades have forced many employers that offer these pensions to go insolvent themselves, which in turn left the multiemployer pension plans with fewer and more financially stressed contributing employers.

Republicans, on the other hand, led by Ranking Member Kevin Brady of Texas, were quick to cite their worries about ongoing mismanagement and even maleficence on the part of union leaders and pension trustees. They argue a loan program will do nothing to solve the underlying problems that weakened many of the plans to begin with, and they commonly use the term “bailout” to describe the program.

Boehner and Crowley Weigh In

Asked for their assessment on the current state of affairs, Boehner and Crowley tell PLANADVISER the multiemployer pension crisis must be solved quickly. Every day it grows more severe, they warn, leading to real-world consequences for union workers and retirees who have fully held up their end of the pension bargain.

“We are here to sound the alarm and say that we need to all come together to solve this problem and to protect the hard-earned retirement futures of millions of Americans,” Boehner says. “From New York to Ohio and across the country, hundreds of thousands of retirees and workers are already facing deep cuts to their pensions, and if we don’t change course, families will be devastated.”

“If the pension system in this country isn’t stabilized and it continues on its current trajectory, then millions of workers and families will suffer,” Crowley adds. “The impact will have a ripple effect on our national economy and communities across America.”

Asked for their take on the Butch Lewis Act in particular, Crowley shares the following: “There are a lot of solutions being offered. What John Boehner and I are doing is bringing attention to this crisis. What it’s going to take will be the public sector and the private sector working together to find a solution, and it may take some political courage to address some of these issues. I think that’s really what’s been holding this up. I think now, though, with the new Congress, with divided government in the House and Senate, there may be an opportunity here to see something really worked and engaged on.”

Boehner generally agrees with that assessment, noting there are dozens of feasible ideas being discussed and that it very well could require a combinations of ideas to provide stability to these plans.

“What I and Congressman Crowley and others involved in this Coalition are doing is trying to make people aware of how serious this crisis is and to encourage the public and private sectors to come together sooner rather than later to find a bipartisan, bicameral solution that achieves a good outcome,” Boehner says. “Congress has attempted several times to find a solution. I think what’s different now is the urgency there is to find a solution and find one now.”

Asked what they see as the potential outcome if no solution is reached in the near term, the former House members say the consequences will be dire, both for the union pensioners as well as the broader economy and the U.S. retirement system.

“This problem is getting worse,” Boehner says. “It’s urgent that action be taken, and the sooner the better, because the longer this problem goes on, the bigger the crisis is going to get. If action isn’t taken, millions of Americans are going to lose a significant portion of their retirement benefits, it’s going to affect state and local revenue, it’s going to affect the Pension Benefit Guaranty Corporation—and we’re going to have a real crisis on our hands.”

Crowley echoes the concern about the Pension Benefit Guaranty Corporation.

“The funding backstop for plans that have run out of money is projected to collapse by 2025,” Crowley observes. “The pension crisis does not only affect millions of people in multiemployer pension plans, it has broad implications that impact our economic interests and affect retirees, taxpayers, and Americans just entering the workforce. There’s a boomerang effect here if something isn’t done.”

A Bold Solution Is Needed

Offering some additional context to this discussion, absent deep benefit cuts, many union-sponsored multiemployer pension plans are likely to become insolvent even if they have access to subsidized loans, according to a white paper published recently by the Pension Analytics Group.

Using its Multiemployer Pension Simulation Model, the Pension Analytics Group projects that about 200 multiemployer pension plans covering over 3 million participants will become insolvent over the next 30 years, and that the PBGC’s multiemployer guarantee fund will itself be exhausted by 2027.

“A variety of options are available to prevent the guarantee fund’s exhaustion, such as empowering plans to take stronger actions to avoid insolvency, reducing the level of the PBGC’s benefit guarantee, and increasing the revenue flowing into the guarantee fund through premium increases or by securing additional revenue sources,” the white paper says. “To this list, we can add a concept that has been circulating recently on Capitol Hill—subsidized loans provided to troubled pension plans by the federal government.”

According to the analysis, across some 500 stochastic trials, the average total number of participants in plans projected to become insolvent is 3.1 million in the baseline scenario, and 2 million if the loan program is implemented.

“Thus, on average, the loan program prevents plans covering over 1 million participants from becoming insolvent,” the paper says.

Important to note, the results vary widely across stochastic trials, and in nearly one-third of the trials (30%), the loan program has little or no impact on the number of plans projected to become insolvent.

Meet Your FINRA Board of Governors Large Firm Candidates

A contested election for a seat on the FINRA Board of Governors will be settled at the annual meeting of member firms on August 19. PLANADVISER spoke recently with both candidates in the tight race for the open large firm seat.

Art by Hayden Maynard


FINRA will conduct its annual meeting of firms on Monday, August 19, at 9 a.m. Eastern time in the FINRA Visitors Center in Washington, D.C.

The main purpose of the meeting is to elect individuals to fill one small firm seat and one large firm seat on the FINRA Board of Governors, often referred to simply as the FINRA Board. Notable in the large firm seat election is the fact that the FINRA-endorsed candidate, Andrew Duff, former board chair at Piper Jaffray & Co., faces a challenger in Chris W. Flint, president and CEO of ProEquities Inc.

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It is not uncommon for outside candidates to get on the ballot by petition, and indeed there is an opposition candidate in the small firm seat race. That election is contested by Robert Muh, CEO of Sutter Securities and the candidate endorsed by the FINRA Nominating Committee, and Linde Murphy, a nominee-by-petition who is chief compliance officer for M.E. Allison & Co. Inc.

What is notable in Flint’s candidacy is the fact that he has won the backing of several influential membership organizations in the financial services industry, including the Financial Services Institute (FSI) and the Bank Insurance and Securities Association (BISA). These are considered, respectively, to be among the leading advocacy organizations for the independent financial advice channel and the bank-based financial advice channel.

Not FSI’s First Endorsement 

Dale Brown, CEO of FSI, tells PLANADVISER this is the first time both the independent and bank-based industry associations have jointly endorsed the same candidate in a contested FINRA Board election. It is also, he says, the first time in BISA’s history for endorsing any FINRA Board candidate—let alone, a candidate challenging the incumbent. Adding some additional context, readers may recall that current large firm FINRA Board member Jim Nagengast, chief executive of Securities America Financial Corp., won a seat by defeating the FINRA-preferred in a special election last year. Nagengast also had earned FSI’s endorsement.

Reflecting on the important role of the FINRA Board, Brown says the entity plays a critical role in oversight of the organization’s overall policy and strategic direction. The Board works in close partnership with Robert Cook, FINRA CEO.

“One of the strengths of the FINRA Board of Governors is the diversity of views and perspectives therein,” Brown says. “While we differ from the nomination committee on this election, I want to emphasize that FSI enjoys a great relationship with FINRA. We don’t take that for granted. There are a lot of positive things that are happening at FINRA. We are seeing more transparency and there is a commitment to really listening to and understanding the concerns of their members firms. Our enthusiastic support of Chris is a reflection of the optimism we have in FINRA’s focus and direction.”

Asked to distinguish themselves as a FINRA Board candidate, both Duff and Flint point to their ability to leverage 20-plus years of industry experience. Both also say they are in the prime of their careers in the financial services space, so they have a strong personal interest in seeing that the FINRA Board remains a fair, effective and efficient self-regulatory institution.

Duff, the FINRA-preferred candidate, is now finishing his initial three-year term on the Board of Governors. He says his record of service so far proves he should be allowed to continue in the role.

“During my first term, I helped ensure progress has been made on transparency and communication with member firms,” Duff says. “I’m a huge believer in self-regulation, but the foundation of this is transparency and communication. We’ve done a lot to communicate better about how rules and decisions are made, about what is the financial performance of FINRA, and more. We have set up ongoing vehicles online and in-person to get recurring feedback.”

Another area Duff has focused on is examinations. During his tenure, the conclusion was made by the Board to reorganize and streamline the examination staff, which Duff says is “probably the biggest and most important part of FINRA.”

“In particular, I helped us to move towards more risk-based exams,” Duff explains. “Historically, firms had been reviewed on a simple rotation. Now we are looking at business models and track records, and doing exams based more on a real profile, not just a number in rotation. The examinations themselves are more tailored now to different business models so that they can be both effective and efficient. There is no reason why we can’t be efficient and tailored while still conducting great examinations.”

Another major ongoing project for Duff has been helping to lead the Consolidated Audit Trail (CAT) program.

“To keep it simple, the SEC has asked for a new type of transaction reporting that goes across all markets—across all trades and derivatives in every single exchange. The goal is providing real-time data across all markets, all day every day,” Duff explains. “The goal is to get a comprehensive view of market activity to monitor for wrongdoing more expansively. Setting this up involves extremely complex technologies and capabilities. It’s been a major undertaking. It reflects the sophisticated and evolving capabilities of FINRA to actually be able to do something like that. There are days now when we can process north of 150 billion transactions. It’s an extraordinary amount of volume and complexity.”

A Retail-Oriented Voice

For his part, Flint, the FSI-endorsed challenger, emphasizes the importance of getting a “retail-oriented voice” on the FINRA Board. He says his background will help him collaborate not only with other FINRA Board members but also with other regulators, especially the Securities and Exchange Commission (SEC).

“The introduction and implementation of Regulation Best Interest has been a significant development for our industry, and one that I know we must help to go smoothly as FINRA Board members,” Flint says. “I can provide the needed retail voice that can cut across all the sectors and help FINRA and SEC collaborate effectively. I have had responsibly over distributor organizations, including life and annuity insurance distributor businesses. I’ve worked across banks, wire-houses, independent broker/dealers, insurance-owned broker/dealers, and more. I have helped to build and lead organizations, and I have also been a chief compliance officer. This perspective is needed on the FINRA Board of Governors.”

Duff also indicates he is a proponent of the SEC’s “Reg BI.” Both suggest the SEC has demonstrated that a collaborative process, bringing together industry stakeholders and consumer advocates, is what is required to develop and implement effective rules.

In terms of the influence he hopes to have on the FINRA Board, Flint says he wants to see, “a focus on tamping down on regulation through enforcement.”

“That’s going to be a crucial perspective moving forward, because one-off enforcement actions are not the best way to approach transformational changes that people may feel are needed within financial services,” Flint says. “Again, I would point to Reg BI. This is an example of a good rule, in my opinion, one that was developed through a process of inclusion and in collaboration with trade associations, investors and member firms individually.”

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