Wall Street optimistic yet pragmatic on Social Security

Joseph Malone, dressed in an electric-blue shirt that identifies him as an assistant trader on Wall Street, is an enthusiastic supporter of President's Bush's plan to add private accounts to Social Security.

"I don't look at it as risky," he says while on a break outside the New York Stock Exchange. "It's a good opportunity for younger people like me who may not have much of Social Security around when they retire."

Not surprisingly, the president can count on the pinstriped set. Wall Street generally thinks it's a good idea, in good measure because it means more money going into the stock market.

"Almost everyone on Wall Street feels you have to do something," says David Wyss, chief economist at Standard & Poor's. "They believe in this idea of private accounts, and it puts a lot more money into stocks."

Few brokers, however, expect to get rich writing orders on Social Security accounts, even though the volume could ultimately end up in the trillions. And the nation's financiers don't seem to have the same sense of urgency as Mr. Bush. This past November at the annual meeting of the Securities Industry Association, private accounts didn't come up in any of the speeches.

Indeed, the SIA, which lobbies in Washington, says Social Security is not its top priority. "Our priority is the permanence of the tax cuts for dividends and capital gains," says Margaret Draper, an SIA spokeswoman.

Few brokerage houses want to talk about the issue for fear they might alienate clients. For example, even though the chief investment strategist at Charles Schwab, the discount broker, spoke positively about private accounts at one of Bush's economic events, "We're not actively involved in the debate," says a Schwab spokeswoman.

Some are trying to tread the middle ground. That's the case at Goldman Sachs, where the issue is a "hot topic," says Robert Hormats, vice chairman of Goldman Sachs International. Mr. Hormats, who has served in Washington, says the system needs to be fixed, "and the sooner, the better and the easier it will be." Yet he adds, "There's not any particular outcome we want to see. We just want to contribute to the process."

Another visible face of Wall Street, Peter Peterson, senior chairman of the Blackstone Group, has written books and spoken widely about the problems facing Social Security. But it's doubtful anyone will be asking him to speak out for private accounts, which he has described in his most recent book as a "no-win shell game." (He is in favor of mandated retirement accounts invested in global equity and fixed-income index funds.)

During a recent stroll down Wall Street, it was clear that at least some people were ready to share their views. On one corner, the Lyndon LaRouche fringe group was handing out brochures describing the privatization as a "Foot in the Door for Fascism."

"We're getting a lot of people who say, 'I agree, I agree,' " says Vicky (who didn't want her last name printed).

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