Thursday, November 18, 2010

Who's Numero Uno? Not the Illinois Taxpayer

Trustees of Chicago's failing public pension funds have funneled hundreds of millions of dollars into highly speculative investments that not only have failed to realize outsize returns but also saddled them with underperforming, long-term assets that can't be sold off, a Tribune investigation has found.

The investments, which involved buying equity stakes in businesses ranging from fast-food franchises in Mississippi to a Los Angeles grocery chain, were supposed to plug huge holes in pension fund coffers by yielding gains of up to 20 percent a year.
Wow. Such a deal. And those wonderful out of state investments. Is Alexi their investment adviser?

Trustees? Can we call these guys predatory investors? Come on little Lisa, sue the pants off 'em on behalf of the taxpayers. There's gotta be a law. Ha. Ha. Ha.
Some of the firms reaping rewards have connections to Mayor Richard Daley. One was co-founded by Daley's former campaign manager David Wilhelm. Andre Rice, a Daley appointee to two public boards, runs another. City pension funds already have been criticized for investing about $60 million in a real estate firm co-founded by Daley nephew Robert Vanecko that has lost about $11 million in value, according to fund documents.
Here you go:
Aside from the astronomical returns the funds expected — more than four times greater than the returns of the S&P 500 at the time — investing with Muller & Monroe allowed pension fund trustees to fulfill a state-directed mandate to hire minority- and women-run firms. Rice is African-American.

The legislation was pushed by former state Sen. Emil Jones, who collected more than $140,000 in campaign contributions from such firms afterward.

Among those who contributed to Jones was Rice, who staunchly supports the requirements for hiring minority firms. "White men had all the business," he said. "But did those firms have all the talent and all the know-how?"

Rice, whom Daley has appointed to two civic boards, said his years-long relationship with the mayor had nothing to do with his work for city pension funds. "No one at City Hall has ever made a call on my behalf suggesting or encouraging the funds to look at our firm," he said.
State law was rewritten in the late 90's to allow these kinds of higher risk investments. Golly gee.

And that's just Chicago. How about the state? Secrecy shrouds some pension investments in Illinois. Well, what do you know, the Illinois FOIA law was changed to exempt some pensions in 2005. How convenient.

Jobs are already leaving the state. Graduates, our sons and daughters are jobless--they leave too in search of better prospects.

Illinois' Numero Uno:

So far, Illinois hasn't had difficulty borrowing, but it is paying more to do so. Its Moody's bond rating is the lowest of any state.

Gov. Pat Quinn.

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