By Anne Thompson Chief environmental correspondent
NBC News
updated 2/4/2005 7:19:42 PM ET 2005-02-05T00:19:42

In the war of words over partially privatizing Social Security, there's been surprising silence from the financial industry.

“Wall Street is hesitant because they may not make very much money with these small accounts,” says Greg Valliere with the Stanford Washington Research Group. “And secondly, they fear a political backlash if they're perceived as fighting too hard for this.”

Already the specter of past scandals involving stock analysts and mutual managers has been raised by the AFL-CIO, which opposes the president’s plan. In a letter to brokerage houses, the union claims privatization creates a similar conflict of interest — pitting Wall Street profits against investors’ best interests.

Just how much money could Wall Street make?

The estimates vary wildly. University of Chicago Business School professor Austan Goolsbee has done one calculation.

“If they stick with the government operating the plans and keeping very restricted choices, Wall Street stands to gain somewhere between $100 to $500 billion,” says Goolsbee.

That’s over a 75-year period.

But the Securities Industry Association has a much smaller number — $39 billion.

There's also the issue of investment choices. If they mirror the federal employees' plan and are tied to stock and bond indexes, some mutual fund leaders see little profit and too many variables.

“We don't know the number of people and how much money they would put in,” says James Riepe, chairman of the Investment Company Institute. “Secondly, if in fact it’s modeled on the federal Thrift Plan, there won't be a lot of opportunity for active investment management and that's what most of the industry does.”

Still, some in the industry see benefits.

“You get more money coming into the market, which is good,” says Univ. of Chicago professor Goolsbee. “And you get more customers, more investors who are interested in the market.”

It is a market that is mostly mum on an issue that could affect its future balance sheets.

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