ABSTRACT
CHAPTER SUMMARY There are practical and political reasons that the reform of pension investment practices is urgently needed. U.S. capital markets are increasingly short term and speculative, and pension funds increasingly contribute to this bias. In 1992, pension funds became, for the first time, a larger source of finance than commercial banks. At the same time, pension regulators ignore this role of the pension funds and the potential for pension funds to invest long term, a goal that is appropriate because pension funds have naturally long-term and predictable liabilities-workers' future pension benefits.
