WASHINGTON (Reuters) - U.S. securities regulators on Wednesday charged the former Detroit mayor and treasurer along with the city's public pension investment adviser with devising a secret exchange of "lavish gifts" to influence the pension fund's investments.
In 2006, businessman Robert Shumake asked trustees of Detroit’s two pensions to hand him US$27-million to invest in real estate.
George Orzech, a fire battalion chief who still represents uniformed workers on their fund’s board, found one thing odd:
“Anybody who knows the first names of trustees in a first meeting has already had meetings with people,” said Orzech, who unsuccessfully opposed the plan. “It was a political deal.”
This Real News Network interview with INET executive director and political insider Rob Johnson focuses on what he calls “ugly money politics” which for the most part means the role of finance in state and local elections. He points out how the trigger of Detroit’s bankruptcy was an over $300 million derivatives payment triggered by a ratings downgrade of the city. Oh, and the city manager who approved that deal took a job with the firm that profited from this toxic trade.
Emergency Manager Kevyn Orr’s plan to suspend payments on US$2-billion of Detroit’s debt threatens a basic tenet of the US$3.7-trillion municipal market: that states and cities will raise taxes as high as needed to avoid default.
Highland Park, Michigan is on the brink of bankruptcy. There is no other realistic way out of the fiscal mess the city is in. As is typically the case, public union pensions are at the heart of the problem. Michigan Live reports Highland Park pensions in jeopardy if Fifth Third Bank halts loan payments.
Chicago's image as 'city that works' threatened by looming pension crisis CHICAGO (AP) — It's not the vision of a world-class city that Chicago Mayor Rahm Emanuel typically likes to portray. More teachers losing their jobs, thousands fewer police and firefighters on duty, less frequent trash collection and miles of potholed roads going unrepaired — all as property taxes soar.
New York Mayor Michael Bloomberg invoked Detroit’s bankruptcy to recall the most populous U.S. city’s own brush with insolvency and warn its residents that they shouldn’t take the current fiscal well-being for granted.
Given his role as a senior investments adviser to the chief investment officer of the US$91 billion University of California pension fund, there’s no real surprise that Canadian Brian Gibson has strong views of the structure of a model pension fund.
Gibson, the former senior vice president of public equities at both Ontario Teachers Pension Plan Board and AIMCo, has advanced a number of suggestions as to how the UC fund should operate. Those suggestions have been made to Jagdeep Singh Bachher, the fund’s relatively new chief investment officer.
Reuters - Securities regulators charged an Illinois-based investment adviser on Wednesday with using LinkedIn and other social media networking websites to lure investors by offering more than $500 billion in fake securities.
One of the mildly surprising things about the Stuyvesant Town debacle is the kinds of investors the deal attracted. What were entities like CalPers and the Church of England doing plowing their money in along with real estate moguls like Tishman Speyer?The answer is "looking for alpha". Underfunded pension funds have been looking for extra return in order to make up the holes . . . and the problem is worst among public pension funds, because until recently, their accounting wasn't very good, so politicians were fond of making unfunded promises in lieu of wages.