(FORTUNE Magazine) – With all the proposals for privatizing Social Security flying around, you'd think Wall Street would be stupefied with greed and euphoria. Billions of dollars flowing out of the Treasury and into equities nestled in nice new accounts opened by throngs of eager wage earners....

But you'd be wrong. Most Wall Streeters, it turns out, would rather pass on this particular business opportunity. (For more on privatization, see the story "Will Privatizing Fix Social Security?" in this issue.) In fact, the more closely the financial industry looks at privatization, the less it likes it. For one thing, the size of this new market wouldn't be so gargantuan after all. The leading privatization option would allow individuals to invest two percentage points of the 12.4% of their wages that now go to the payroll tax. This would amount to about $60 billion a year--a pittance compared with total market capitalization that at year-end 1998 was $12.8 trillion.

Worse, from the Wall Street perspective, is the fact that the new system would create scads of accounts that are too tiny to be profitable. Again using the leading privatization proposal, the average contribution to a personal retirement account would be $600 a year. But since two-thirds of workers covered by Social Security earn less than $25,000 a year, about 90 million of those accounts would receive less than $500 a year. Who could make money on that? Besides, investment firms don't want to anger the unions whose huge pension funds they manage.

So despite what you might have heard, the effort to privatize Social Security is not led by some shadowy cabal on Wall Street. "You read all the time that Wall Street is conspiring to privatize the Social Security system," huffs John Collins, a spokesman for the Investment Company Institute. "Speaking for the mutual fund industry, that's just inaccurate. It has not been demonstrated that privatization would benefit us." Marc Lackritz, president of the Securities Industry Association, agrees: "We're an easy scapegoat for unions and others who are trying to scare people. But if you look at the numbers, this isn't the next big gusher for the investment industry."

As a result, the privatization juggernaut, led by antigovernment think tanks, has stalled. "We certainly expected a lot more companies to provide support," grouses Pat Korten, spokesman for the Cato Institute. Adds William Beach of the Heritage Foundation: "We say that we want to have financial support from Wall Street, but we just can't get it." So much for conspiracies.

--Jeffrey H. Birnbaum