Federal Reserve 401(k) Dodges Stock Market Meltdown With Stable-Value

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					Federal Reserve 401(k) Dodges Stock Market Meltdown With Stable-Value
Products, Author Finds
Barry J. Dyke, author of The Pirates of Manhattan found that the majority of employee assets in
the huge $4.5 billion Federal Reserve System 401(k) dodged most of the stock market meltdown
by having a majority of its assets invested in stable-value life insurance products.
Hampton, NH (PRWeb) December 2, 2008 -- Barry J. Dyke, author of The Pirates of Manhattan found that the
majority of employee assets in the huge $4.5 billion Federal Reserve System 401(k) dodged most of the stock
market meltdown by having a majority of its assets invested in stable-value life insurance products.



 According to a third quarter 2008 Federal Reserve report and a Deloitte audit, which covers 22,000 employees at
the Fed, more than $3.15 billion or 69.7% of the $4.5 billion 401(k) Thrift Plan for the Employees of the Federal
Reserve System is invested in its Fixed Income Fund. This fund is exclusively invested in stable-value group
annuity contracts from major U.S. life insurance companies—not volatile mutual funds.

 Unlike mutual funds, which do not guarantee safety of principal, stable-value products guarantee safety of
principal and competitive annual earnings. Fed employees have embraced stable-value life insurance products
over volatile equities. According to a Deloitte audit, in 2006 Fed employees placed 64% of their money into the
Fixed Income Fund and in 2005 67.9%.

 A nationally known critic of the mutual fund industry, deregulated banks and the speculation mania ignited by
Wall Street—Dyke predicted a market collapse in May 2007 when The Pirates of Manhattan was released
www.ThePiratesofManhattan.com. Using government research, the author documents that the mutual fund
business was full of poor performance, excessive trading, over speculation, misinformation ,corruption, greed and
little oversight—all key ingredients to a speculation bubble.

 Stock mutual funds, the primary investments of the nation’s 401(k)s, have seen their returns decimated during the
past eighteen months. According to Lipper, Inc. with the Dow Jones Industrial Average down 9.1% in November,
average total returns on stock mutual funds, U.S. and international are down 50% in 2008. The mutual fund
industry lost more that 20% of their assets in the past five months, falling to $9.5 trillion assets under
management from a high of $12 trillion in May 2008.

 However, with 69.7% of its 401(k) assets in stable-value insurance products, Federal Reserve employees have for
the most part dodged the market meltdown which side swiped most Americans. The stable-value Fixed Income
Fund gives a 5.8% 2008 return. Their Government Securities Fund has returned 3.5% year to date. Other Fed
investments performed dismally. Their Equity Fund is down -18.8%, Equity Index -18.4%, International Equity
–28.8% and Small Company Equity -11.9%.

 The Fed’s use of stable-value insurance products for it’s 401(k), even though it has proven to be a successful
strategy, flies in total opposition to the mutual fund industry long standing efforts to exclude insurance products
from 401(k) plans.

The powerful mutual fund trade group—the Investment Company Institute (ICI)—lobbied intensely to exclude

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stable-value insurance products in 401(k) plans as a default investment. As a result, on July 11, 2007, the
Department of Labor submitted to the Office of Management and Budget proposals to exclude conservative
stable-value insurance products. The mutual fund industry was successful. Target date or life-cycle mutual funds
were given the green light as the 401(k) default investment option—excluding stable value.

 The rationale behind target date funds is that they are a one size fits all investment for 401(k) participants’
projected retirement date. Yet these funds are highly complex, been criticized for having excessive fees, can hold
just about anything for investments and have not lived up to the promises of the mutual fund industry. Target date
fund investment returns have been hammered in 2008. The average target date fund lost -10% in the third quarter.
This is worse than the S&P 500 Stock Index loss of -8.4%.

 The Federal Reserve does not mention the viability of life insurance products or annuities in its communications
to the public. The Fed’s showcase pamphlet, Building Wealth: A Beginner’s Guide to Securing Your Financial
Future only mentions annuities in the glossary.

 BARRY JAMES DYKE, author, is the president of Castle Asset Management, LLC of Hampton, New
Hampshire. For more twenty-five years, he has practiced financial planning, founded a pension consulting
business, a third-party administration firm, a health & welfare consultancy and a registered investment advisor
www.castleassetmgmt.com. He has worked with individuals, privately held companies, publicly traded
companies, venture capital firms and national celebrities.

 His book, The Pirates of Manhattan—which illuminates corruption within the financial service industry, has sold
thousands of copies in all 50 states, Europe, England, Asia, Australia and Canada. To order, go to
www.ThePiratesofManhattan.com.
 For additional review information, including press review copies, you may contact the author directly at
barry@thepiratesofmanhattan.com , telephone 800-335-5013, Castle Asset Management, LLC, 2 King’s
Highway, P.O.B. 95, Hampton, NH 03843-0095

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Contact Information
Barry Dyke
555 Publishing, Inc.
http://www.ThePiratesofManhattan.com
800-335-5013



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