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.
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.
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.
Our efforts to learn more about the private equity equity industry are revealing how determined public pension funds are to hiding as much as they can, even when they don’t have a legal leg to stand on.
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.
In a zero interest rate environment, we can think about market participants in two groups:
Those who are taking risk because they can.
Those who are taking risk because they have to.
These are not the traditional buckets. Normally the dividing lines run retail versus institutional… investor versus trader… value versus growth or what have you.
Pension plans rebounded sharply in 2009 and 2010 from the devastating losses in 2008. However they never got back to even. 2011 was another poor year, and in spite of the start to 2012 I expect this year and/or next year to suffer more losses, or alternatively the market to limp along with no gains for a number of years.