Gov. Christie Shifted Pension Cash to Wall Street, Costing New Jersey Taxpayers $3.8 Billion

[Hissyspit]

This discussion thread was locked as off-topic by pinto (a host of the Latest Breaking News forum).

Source: International Business News

@davidsirota: Docs show @GovChristie's move to give Wall St pension cash has cost taxpayers $3.8B - or $1200 for every NJ household http://t.co/JFnwBSgI3t/s/1juV

Gov. Christie Shifted Pension Cash to Wall Street, Costing New Jersey Taxpayers $3.8 Billion

By David [e-mail]@ibtimes.com

on August 25 2014 8:16 AM

Gov. Chris Christie's administration openly acknowledged that more New Jersey taxpayer dollars were going to land in the coffers of major financial institutions. It was 2010, and Christie had just installed a longtime private equity executive, Robert Grady, to manage the state's pension money. Grady promoted a plan to put more of those funds into riskier investments managed by Wall Street firms. Though this would entail higher fees, Grady said the strategy would "maximize returns while appropriately managing risk."

Four years later, New Jersey has secured only half the promised results. The state has sent more pension money to big-name Wall Street firms like Blackstone, Third Point, Omega Advisors, Elliott Associates and Grady's old firm, The Carlyle Group. Additionally, the amount of fees the state pays financial managers has more than tripled since Christie assumed office. New Jersey is now one of America’s largest investors in hedge funds.

The “maximized returns” have yet to materialize.

Between fiscal year 2011 and 2014, the state’s pension trailed the median returns for similarly sized public pension systems throughout the country, according to data from the financial analysis firm, Wilshire Associates. That below-median performance has cost New Jersey taxpayers billions in unrealized gains and has left the pension system on shaky ground. Meanwhile, New Jersey is now paying a quarter-billion dollars in additional annual fees to Wall Street firms -- many of whose employees have financially supported Republican groups backing Christie’s reelection campaign.


Between 2009 and 2013, New Jersey has paid an additional $439 million in fees to Wall Street International Business TImes/Hanna Sender
Those who originally opposed the state's shifting of pension funds into hedge funds, private equity, venture capital, real estate and other “alternative investments” see the below-average returns as no accident but an inevitable byproduct of the strategy: The Christie administration has effectively taken money from retired state workers and delivered the cash to Wall Street money managers.

Read more: http://www.ibtimes.com/gov-christie-shifted-pension-cash-wall-street-costing-new-jersey-taxpayers-38-billion-1667622

[cbdo2007]

1. In this case 401K would have been much better for employees than a pension.

[Fred Sanders]

2. Maybe he could settle for $12 billion and avoid a prosecution and prison like everyone else?

Make defined pension plans mandatory, start with the federal government and all major contractors, everything else is a crap shoot.

[tomm2thumbs]

3. Talk about closing down casinos in New Jersey, sounds like Christie opened up his very own....

Time to close that idiot's cash vacuum down!

[mahatmakanejeeves]

4. Harrumph. My investment advisor is Warren Buffett, and Warren Buffett says....

Investors Pour Into Vanguard, Eschewing Stock Pickers

For younger members, this is where that line came from:

or, for fans of tube socks:

[PeoViejo]

5. Christie is only doing the job he was paid to do.

By Wall Street and Corporate America.

[samsingh]

6. christie is worse than i would have ever thought

[benld74]

7. Pension funds have no business being placed in risky investments to begin with,,,,,,,

[BrotherIvan]

8. This is part of Citizen's United

I'm sure he's not the only one. I hope they investigate Walker because there's no doubt he's doing it. And they're all too stupid to figure it out for themselves so there is probably some "group" behind it. It should be fucking ILLEGAL!!!!!!

[ReRe]

16. I think the Ohio Governor...

... was involved in this kind of stuff before he became governor. Lots of other states have done it. Somebody chime in if you remember other states, or parties to this abhorrent bait-and-switch. It's what the Repubs want to do with Social Security.

[BrotherIvan]

18. It is robbing the coffers of the state and there should be a law against it!

But sadly, no. Those bankers got a great deal. A few hundred grand or probably less than a million and hundreds of millions in return. Politicians: the best investment ever.

[lark]

9. JAFRSFM

Just another fucking Repug stealing folks money

[Scuba]

10. Well sure, but the Wall Streeters deserve that money. They work hard, ya know?

[IDemo]

11. Momentary dyslexia for me on that headline

Read it as "Gov. Shiftie".

[wolfie001]

12. Slush fund for Wall Street. nt

[Enthusiast]

13. Christie, did you do that? You dumb fuck, you.

3.8 billion? That's some serious tax payer money you wasted there, bud. Better rethink this presidential run thing.

[closeupready]

14. LOL, an expensive game of hot potato, little more.

Where state workers literally paid Wall Street bankers to play lucrative games with their retirement money - courtesy of Christie, of course.

If you were dishonest, greedy, and in banking, wouldn't you also want in on this? I mean, isn't it clear what the game is here? OBVIOUSLY state workers haven't gotten the returns they were promised - they were never going to make those returns.

[LiberalEsto]

15. I believe former NJ Gov. Christine Whitman (R) also dipped into state pension funds somehow

One of my close friends -- a former high school classmate -- is a teacher in NJ and is now approaching retirement age. She is afraid there won't be any pensions for her or her colleagues.

This kind of cavalier looting of EARNED pension money should be prosecuted, and those responsible should be sent to prison.

[bklyncowgirl]

17. This is my future this clown is playing with.

I'm not surprised of course. Republican governors have always regarded our pension funds as some sort of piggy bank.

[Divernan]

19. Did hedge fund traders/owner, Marc & Chelsea Mezvinksky get some of that action?

Yes - looking at you Chelsea & Mark. How many hedge funds which you administered were ripped off to finance that $10 million dollar apartment?

NEW YORK — Former first daughter Chelsea Clinton has joined Avenue Capital Group, a $12 billion hedge fund manager whose founder has contributed to many Democratic Party campaigns, a person familiar with the matter said Friday.

Clinton, 26, the only child of former President Bill Clinton and U.S. Sen. Hillary Rodham Clinton, has taken a post at the New York-based fund manager in an undisclosed capacity, the source said.

http://www.nbcnews.com/id/15549672/ns/business-us_business/t/chelsea-clinton-joins-new-york-hedge-fund/#.U_uPSaN5uSo

The 33-year-old husband of Chelsea Clinton created a mini media firestorm early this year when news came that he left his job at New York hedge fund 3G Capital before the holidays to take an extended ski vacation in Jackson Hole, Wyo. Mezvinsky has "decided to spearhead his own private [hedge] fund with two other guys," and ideally will launch the company in the next few months.

To help get the job done, the source adds that Mezvinksy will team up with "two guys from Goldman Sachs," the investment banking mammoth where he worked from 2002 to 2008 (before joining 3G).
What's unclear is whether his intended partners are current or former members of the investment banking firm that Rolling Stone writer Matt Taibbi famously dubbed a "great vampire squid wrapped around the face of humanity."

http://www.nydailynews.com/entertainment/gossip/chelsea-clinton-husband-marc-mezvinsky-opts-start-private-hedge-fund-year-source-article-1.141086

The Hedge Fund Ripoff
There is no doubt that hedge-fund managers have been good at making money for themselves. Many of America’s recently minted billionaires grew rich from hedge clippings. But as a new book by Simon Lack, who spent many years studying hedge funds at JPMorgan, points out, it is hard to think of any clients that have become rich by investing in hedge funds (whereas Warren Buffett has made millionaires of many of his original investors). Indeed, since 1998, the effective return to hedge-fund clients has only been 2.1% a year, half the return they could have achieved by investing in boring old Treasury bills.


Insofar as hedge fund managers are just running a scam where one class of rich people rips off another class of rich people, I'm not sure there's anything systematically problematic about this. But a large share of the money invested in hedge funds seems to come from foundation endowments and pension funds. That in turn makes me wonder to what extent some of the dysfunctional aspects of the financial system can be traced back to dysfunctional governance of those institutions.

The big picture point here is that investment strategies, on average, can't outperform the economy as a whole over the long run. People find that disappointing and are always excited about the news that one asset class or another has done much better than that over some medium-range period of time. But by the time the word is out that stocks are a great investment, or that hedge funds can get you 8 percent returns, or whatever else it is it's probably already too late. Hedge funds had their best moment before they got famous. Once everyone's rushed in, it's too late.

http://www.slate.com/blogs/moneybox/2012/01/21/the_hedge_fund_ripoff.html

[pinto]

20. Good, well sourced background / analysis piece, but not Late Breaking News. Locking.

Hosts encourage re-posting in another major DU forum. Thanks.