Yep, the Obama administration has created a new investment fund that allows private citizens to create Roth IRAs that only invest in Treasury bonds. Roth IRAs allow individuals to invest after-tax dollars in tax-free investment accounts.
President Obama announced the fund last year in his State of the Union address. However, Congress never passed legislation authorizing this new fund.
Investors in the fund don't have to pay fees and can contribute as much or as little to the fund as they want. Those of you with investment experience may wonder how Comerica, the firm hired to run this program, can profit under these conditions. The answer is (I hope you're sitting down)... they are receiving taxpayer subsidies.
The Wall Street Journal article linked here (subscription required) provides more details. Excerpted below is the article's conclusion, which sums up the problems with this new program:
The subsidies in myRAs are likely to be small at first, but the history of government programs is that they expand over time. And if such a subsidy scheme can be enacted administratively, does anyone think this will be the last time such power is exercised?
New investors should be encouraged to consider ways to build wealth beyond simply lending money to the feds. And if politicians want taxpayers to support another retirement program, they should do so through law, not White House whim.
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PDFTags: Obama, debt, abuse of power