-->konsumiere hier und jetzt, bereue später *gg*



Card turns 401(k) to quick cash

By David A. Vise - Washington Post

WASHINGTON - For a quarter-century, a Boston inventor has been obsessed with a single idea: an innovation that would give millions of American workers the chance to borrow their own money from their 401(k) savings plans using a new kind of credit card.

In 1980 the inventor, an animated fellow named Francis Vitagliano, shared his concept with an MIT professor, Franco Modigliani. The Italian-born economist had been writing for 20 years about his theory of how and when people spend and save money during their lifetime, the Life-Cycle Hypothesis. Modigliani's work would win him the 1985 Nobel Prize in Economics, but the call from Vitagliano would, he thought, give him a way to test his theory in real life.

The men became champions for this new financial instrument, spending untold sums for a patent on the card idea, trying to sell it to banks and credit card companies, and withstanding a barrage of criticism from members of Congress and the financial community.

Franco Modigliani died last year at age 85. But on Oct. 25, Francis Vitagliano, now 55, watched as the 401(k) card was unveiled at a financial conference in Washington. An official of ING, the global financial services company that has licensed Patent No. 5206803, is introducing the new card to employers and their k-plan participants soon, after receiving final regulatory approval from the state of Connecticut.

In this time of worry about the American retirement system, the card will again cause a flap - but possibly not as much as it has in the past.

Whatever the immediate outcome, this is not the last stop for the controversial card as it does or does not become a staple of American getting and spending. And the tale of how it came to exist is one worth telling.

Working in the pension-compliance field, Vitagliano had his breakthrough idea about the retirement card decades ago when 401(k) savings accounts were in their infancy. But even then he could see that workers would apply to borrow some of the tax-deferred savings from their k-plans, putting employers through a cumbersome process to approve loans for purchase of a principal home or education or large medical expenses. It would be a laborious process at best, one that employers and plan administrators would grow to dislike as much as the employees did. A 401(k) card would make the process much easier.

He and Modigliani also shared the belief that a 401(k) card would give workers the chance to replace costly credit card debt, often bearing interest rates above 20 percent, with lower-cost funds from their own savings. They also held fast to the view that easier access to 401(k) savings would encourage more employees, especially younger ones, to put greater sums of money away for retirement, knowing that they weren't locking it away for decades.

Each of those ideas had powerful critics.

In the mid-1990s, Vitagliano and Modigliani appeared on the verge of success after licensing their patent to Bank One, a major Ohio bank that was ready to roll out the credit card. But bringing a new product to market is fraught with peril, as they found out when they ran into opposition in Washington.

The retirement card would cause people to drain their 401(k) accounts, said then-Rep. Charles Schumer, D-N.Y., who introduced a bill to block it.

What about the chance for people to replace those high-interest-rate credit cards? The major credit card companies lobbied hard to derail the concept.

Facing the political heat, Bank One dropped the idea.

The mettle of the two men was next tested when they were offered up to $10 million to sell their patent. Should they cash in and take a sure thing, or should they wait and pursue the prospect of greater profits through royalties in the future? Ultimately, fearing the card would not be introduced properly without their hands-on involvement, they rejected the millions and decided to continue their quest. Over the ensuing years, they sometimes spoke about the millions they had passed up. And their frustration mounted as they made one false start after another.

The running joke in Vitagliano's household was that he was lucky to have married a psychiatrist because there was no other way he could have afforded the therapy needed to endure the anguish. Vitagliano's wife, Halyna, put it in simpler terms: She would not buy curtains for the living room in their townhouse until the new credit card was introduced.

The impending arrival of the 401(k) card is a victory for Vitagliano, whose favorite expression is a childlike “Oh boy!” and who has kept himself fresh by pursuing the invention with vigor while working in a series of pension-compliance jobs.

Years ago, before entering the pension field, Vitagliano did intelligence work at the National Security Agency. That sense of adventure and intrigue remained with him through the years, as he and Modigliani suffered setbacks.

“The journey has been fascinating,” Vitagliano said. “If all we really wanted was to make money, we would have taken the money we invested in getting the patent and bought a fast-food franchise. Our commitment has been to the value of the invention and that it be implemented properly.”

The debate over whether the 401(k) card is a good idea or a bad idea continues, though it has stronger proponents, and fewer adversaries, than it did a decade ago.

Lawrence Summers, president of Harvard University and former secretary of the Treasury, said in late October that he supports the new card because he thinks it will increase people's willingness to save money for retirement. People are more likely to put money into a 401(k) account, he said, if they can access the funds.

-->>Lawrence Summers, president of Harvard University and former secretary of the Treasury, said in late October that he supports the new card because he thinks it will increase people's willingness to save money for retirement. People are more likely to put money into a 401(k) account, he said, if they can access the funds.

-->>>Lawrence Summers, president of Harvard University and former secretary of the Treasury, said in late October that he supports the new card because he thinks it will increase people's willingness to save money for retirement. People are more likely to put money into a 401(k) account, he said, if they can access the funds.

Da solche Funds über die Karte und den Zugriff jederzeit fällig werden können, muß der Rentenversicherer entsprechend vorhalten. Er muß also genügend Titel in Peto haben, die er sofort zu GZ machen kann.

Eine entsprechende Erhöhung der Liquidität der Fonds läßt sich also nur über den berühmten "debtor of last ressort" bewerkstelligen. Den kennen wir ja im Forum. Neulingen sei sie Frage erlaubt, wer das denn sei.

Gruß zu Allerheiligen,

Theo