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WASHINGTON – The House recently introduced a resolution to include a community bank option in any Social Security reform legislation. The resolution, introduced by Reps. Pete Sessions (R-Texas) and Tom Feeney (R-Fla.), includes an option that permits workers to invest their monies in products, such as certificates of deposit, offered by credit unions, banks and savings associations. Under President’s Bush’s plan to reform Social Security, workers would be allowed to divert up to two-thirds of their payroll taxes into private investment accounts. Contributions would be capped at $1,000 per year, rising each year by $100. Social Security’s guaranteed benefits would be reduced to make up for money diverted to the private accounts. According to the White House, full Social Security benefits may not be available starting in 2042 or 2052. CUNA has urged Congress to consider allowing credit unions to offer accounts that tie in to Bush’s proposed accounts. In their resolution, both Sessions and Feeney, who is a member of the House Financial Services Committee, cited specific examples in their respective home states of accounts modeled after what Bush is proposing. For instance, employees of Galveston County, Texas, contribute to a personal retirement account that resembles a bank option, which is referred to as a “community bank option” in the resolution that has earned interest rates that average 6.5% in annual returns, with some returns of up to 15.5%. According to the resolution, the employees “bear virtually no risk with these accounts and, in return, receive guaranteed rates of return.” Three other counties in Texas have allowed county employees to take an approach similar to a community bank option for more than 20 years. In Florida, restructured retirement opportunities for eligible Florida State employees allow personal accounts “that have proven successful in maximizing participants’ long-term savings and securing the State’s pension program,” the resolution said. The resolution also states that monies deposited at a local community bank, savings association, or credit union will be used in that community again in the form of small business loans and home mortgages. Meanwhile, America’s Community Bankers applauded the resolution and urged House members to vote on it assuring them that the “nation’s community bankers are ready, willing and able to provide working Americans with a Social Security investment alternative to investing in stocks and bonds.” “Community banks can be a critical part of Social Security reform. With the ability to offer a safe, insured savings alternative for private accounts, community banks can provide customers a secure, risk-free option,” said Diane Casey-Landry, ACB president/CEO. “Community bankers also know their customers and can answer investment questions and provide advice on appropriate bank products. ” [email protected]

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