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Pensions – RI Future http://www.rifuture.org Progressive News, Opinion, and Analysis Sat, 29 Oct 2016 16:03:26 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.25 Back to basics: RI will switch from costly, risky hedge funds http://www.rifuture.org/costly-risky-hedge-funds/ http://www.rifuture.org/costly-risky-hedge-funds/#respond Thu, 29 Sep 2016 00:39:50 +0000 http://www.rifuture.org/?p=68255 hedge-fundsWhen Seth Magaziner ran for General Treasurer in 2014, he promised that his top priority would be putting Rhode Island’s ailing pension funds in a better position by securing higher returns on investment at the lowest practical risk.

I spoke to Seth this afternoon about his new plan for the pension funds which was unanimously approved today by the State Investment Commission.

The state’s public pension funds currently hold around $7.6 billion of which about $1.1 billion has been invested in so-called “hedge funds” that were originally intended to provide investors with good returns and security.

However, as numerous reports have shown, hedge fund performance hasn’t matched hedge fund promises, except perhaps for their managers who have become billionaires while handling other people’s money.

Searching for alternatives, the Treasurer’s office conducted months of research and consultation with financial experts. They also ran “thousands of models and projections” to come up with a better way to get better returns on investment without undue risk.

The result was announced by Seth today – a “Back to Basics” plan to move about half of the money the state has invested in hedge funds – around half a billion dollars – into safer, better investments such as low-fee index funds.

This will take place over the next two years.

I asked Seth to talk about the challenges of coming up with such a plan, such as public impatience with the pace of change.

“When you’re moving this much money,” he said, “You have to do it in an orderly fashion.” He said making such changes was “like steering an aircraft carrier – you can’t turn on a dime.”

Then there is the matter of exit fees involved when leaving investment vehicles such as hedge funds. “We wanted to make sure we avoided early redemption fees” which in some cases could be significant.

The other factor requiring a careful, deliberate approach is the need to find solid investment alternatives.

I told Seth that the dream of many people, me included, is to see pension fund money used to create local jobs and businesses. But I acknowledged the fact that pension law doesn’t really allow that to be a major pension fund priority.

Seth pointed out that the first duty of any pension trustee is to secure the best rate of return for beneficiaries with the least risk.

That said, among the alternatives they’ve explored are funds that invest in infrastructure. He noted the infrastructure investment market is very “hot” at the moment so the cost of buying in is high. Of course, the basic rule of investing is “buy low, sell high” not vice versa, so timing is a key issue.

Rhode Island has used its pension funds’ proxy voting rights to join with other public pension funds around the country to support shareholder resolutions against excessive executive pay and other abusive corporate practices. These pension funds control millions of shares so they carry some weight at corporate annual shareholder meetings.

The state pension fund is no longer in crisis as it was six years ago. Since Seth took office two years ago, the fund has run in the black for the two years, earning more than $390 million and beating the fund’s goal.
Rather than give back so much to hedge funds, the “Back to Basics” plan should reduce costs while boosting earnings while taking a cautious, prudent approach to risk.

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RI Progressive Dems urge Clinton to withdraw Raimondo appointment http://www.rifuture.org/ripda-clinton-raimondo/ http://www.rifuture.org/ripda-clinton-raimondo/#comments Mon, 25 Jul 2016 20:56:29 +0000 http://www.rifuture.org/?p=66475 RIPDA logoThe Executive Board of the Rhode Island Progressive Democrats wishes to express extreme displeasure that Hillary Clinton would name Governor Gina Raimondo as a co­-chair of the Democratic convention. While this role is purely ceremonial, it indicates that some of Clinton’s advisors may consider Raimondo an acceptable figure within the national Democratic party, a sentiment that would be deeply chilling. Raimondo’s politics represent a brand of conservatism well to the right of basically anyone of prominence in the national Democratic party. Deeply unpopular in Rhode Island, Raimondo is known for her aggressive push to restrict women’s access to abortion coverage through plans sold on Rhode Island’s exchange. She is also one of the most aggressive proponents of pension cuts, which Democrats just voted to oppose in our party platform. She has been a feisty advocate of expanding fossil fuel infrastructure, and she even opposes repealing Rhode Island’s tax cuts for the rich. A former private equity executive, Raimondo epitomizes an extreme type of Wall Street politician. After the withdrawal of banker Antonio Weiss, the national party has had an informal rule against Wall Street appointees for top posts. Raimondo appears to violate that rule.

We ask that the Hillary Clinton campaign withdraw this appointment. We believe it is crucial for the Hillary campaign to send a signal that they will not be considering Raimondo for any posts in a Hillary administration, an event that would place the even more right wing Dan McKee in power. McKee is such a far­ right Democrat that we took the completely unprecedented step of urging voters to support his Republican opponent Catherine Taylor, and the AFL-­CIO went further and openly endorsed Taylor.

Moreover, we urge Hillary to make it clear that she, the national Democratic party, and the DSCC will oppose Raimondo in the primary should she attempt to take a US Senate seat in the future. Raimondo is so unpopular in Rhode Islanders that she could easily lose to a Republican. In fact, she only won by four points against a weak GOP opponent in a state that Obama won by 27 points. A Raimondo nomination is the GOP’s only path to a US Senate seat from Rhode Island, and it is of utmost importance that the national party prevent such a debacle. The national party has often intervened in primaries to stop weak nominees from jeopardizing a Democratic US Senate seat, most recently in Pennsylvania. We urge Hillary Clinton to make clear she will do the same in Rhode Island to prevent a Raimondo nomination and a GOP victory, should Raimondo attempt to take a US Senate seat.

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Democratic Party platform frowns on Raimondo-style pension cuts http://www.rifuture.org/rirta-democratic-party-platform-raimondo-pension/ http://www.rifuture.org/rirta-democratic-party-platform-raimondo-pension/#respond Wed, 20 Jul 2016 10:16:22 +0000 http://www.rifuture.org/?p=66057 Continue reading "Democratic Party platform frowns on Raimondo-style pension cuts"

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RIRTA-600x600

Secretary of State Nellie Gorbea described it as “the most progressive platform ever put forward by an American political party.” Sen. Bernie Sanders said, “Our job now is to see that platform implemented by a Democratically controlled Senate [and] a Democratically controlled House.” Yet one small detail might have Gov. Gina Raimondo nervous.

In between verbiage about public college and healthcare in the proposed Democratic Party platform is a small passage that deals directly with pensions.

Democrats believe it should be easier for Americans to save for retirement and prepare for unforeseen risks and expenses. We will defend the right of workers to collect their defined benefit pensions and make sure workers get priority and protection when pension plans are in distress. Democrats will also fight to protect the earned pension benefits of Americans in multi-employer pension plans. And we will fight against any attempt by Republicans in Congress or on Wall Street to roll back the Conflict of Interest Rule, which requires that retirement advisors put the best interests of their clients above their own financial gain.

In layman’s terms, the Democratic Party publicly rebuked the exact kind of pension reform Raimondo pushed in Rhode Island.

Defined benefit pensions were the norm for Rhode Island public sector retirees until Raimondo introduced the concept of the “defined contribution” plan in her signature overhaul of the state pension system in 2011.

This is a strong rebuttal to the Raimondo-flavor of Democrats, fiscal conservatives that used to define John Chafee’s version of Republican Party politics.

If you or someone you know is a pensioner, consider becoming an Associate member of Rhode Island Retired Teachers Association to support their efforts.

Click Here To Download The Membership Enrollment Form For RIRTA and Support Pension Sustainability!

Donate Today to RIRTA!

And even if you are not involved with the fund, you still can donate to this group and help fund their efforts. Donations (checks preferred, made out to RIRTA- memo line LDF) can be mailed to PO Box 7631, Warwick, RI 02887 or sent via PayPal (see below).



The cancellation of pensioner COLAs was supposed to help the fund return the fund to solvency. But even with retirees having no retirement income, the fund has yet to reach 80 percent funding due to outrageous fees and continued mismanagement.

When Raimondo began her efforts, she held a series of public forums that hindered the ability of pensioners to vocalize their objections. This led to a great deal of heartache for those who had done honest work all their life and were given a muzzle and austerity policy in return for public sector service. But now it is plain that, in the long run, it is Raimondo who has just gotten silenced.

Does this open room for better fiscal management of the fund by Treasurer Seth Magaziner now? Will the pension fund have its solvency and security insured through divestment from high-risk, high-fee hedge funds and a dismally under-performing real estate portfolio? Following Raimondo’s failure to deliver the Ocean State for Clinton in last spring’s primary, could this be another nail in the coffin of a political career built on misrepresentation and misappropriation? Could this small item be the location of post-electoral grassroots mobilizing?

Only time will tell.

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Labor concerns over RI’s GEM Realty investment http://www.rifuture.org/treasurer-gem-realty/ http://www.rifuture.org/treasurer-gem-realty/#comments Thu, 23 Jun 2016 14:42:59 +0000 http://www.rifuture.org/?p=64894 Seth Magaziner
Seth Magaziner

The RI State Investment Commission voted to invest $20 million with GEM Realty Capital, despite the company’s claim that the health and safety of employees at the Sofitel Los Angeles Hotel in Los Angeles, one of the many properties owned by the company, is not something they can have any affect on.

GEM Realty describes itself as a real estate investment company that invests in “private-market real estate assets and publicly traded real estate securities”. At the meeting on Wednesday morning, two GEM Realty representatives admitted that there were problems at the Sofitel Los Angeles Hotel, but said that as they are not the majority investor in the enterprise or involved in the day-to-day management of the business, there is little they can do to effect positive change in the way workers are being treated at the properties they invest in.

Treasurer Seth Magaziner lead the questioning of the company reps about the allegations of unsafe and un-sanitary labor conditions at the hotel and Commission member Marcia Reback asked about the use of a firm known for union busting to prevent workers from unionizing. The GEM Realty reps assured the Commission that the union-busting firm was no longer employed by the hotel and that the health and safety issues were in the process of being resolved via the National Labor Relations Board (NLRB).

On April 25 employees filed a complaint with the CA Division of Occupational Safety and Health complaining about the hotel’s failure to provide safety equipment to employees charged with cleaning medical waste from Sofitel Los Angeles Hotel rooms. Many guests receive treatment at a nearby hospital and leave medical waste behind. Though management shows an instructional video every year about the proper disposal of needles and  bloodied linens, employees say “the hotel does not provide the safety equipment shown in the video”.

GEM RealtyThe Sofitel LA Hotel has also drawn “multiple Unfair Labor Practice charges that are currently being investigated by the regional office of the NLRB alleging that since employees raised the health and safety issues, hotel management has responded by threatening and surveilling employees and in one case illegally firing one of the employee leaders,” says Jim Baker coordinator for Unite Here. These case can be accessed here.

Then there’s the class action lawsuit seven employees have brought against the hotel alleging wage theft. Business Wire reports, “Six of the plaintiffs allege being paid less than the minimum wage while working at the Sofitel Los Angeles at Beverly Hills. A former barback, as well as three housekeeping workers, a banquet worker, and a restaurant server, allege that management underpaid or have been underpaying them by up to $5.37 per hour.”

Sofitel Los Angeles Hotel
Sofitel Los Angeles Hotel

Aside from the allegations of deplorable labor practices, there may be sound financial reasons to avoid investing in GEM Realty, says Sam Bell, executive director of the Rhode Island Progressive Democrats of America, has concerns about the very idea of private equity investments for our pension funds.

“With their high fees, private equity investments are a bad deal for our pension fund,” says Bell, “As Treasurer, Gina Raimondo, who made her fortune in this controversial industry, made a big move into high-fee funds, and that decision continues to drive our pension fund’s poor performance.  Seth Magaziner campaigned on a new kind of politics.  Expanding private equity investments, while other funds are pulling out of high fee options, would represent a move back to the aggressively pro-Wall St. policies of the previous Treasurer.

“Real estate private equity funds are especially poor choices, given their distinctive record of pushing policies that hurt American families,” says Bell, ” In the case of GEM Realty Capital, it is aggressive violations of workers’ rights that stand out, but across the real estate investment industry in general there is a serious and pervasive culture of immorality.”

Though the GEM Realty reps were asking for a $30 million investment from the state, the board seemed to feel that a $20 million investment was more in line with their investment strategy.
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New York and California divested pensions from hedge funds, can RI? http://www.rifuture.org/new-york-and-california-divested-pensions-from-hedge-funds-can-ri/ http://www.rifuture.org/new-york-and-california-divested-pensions-from-hedge-funds-can-ri/#comments Mon, 09 May 2016 15:34:09 +0000 http://www.rifuture.org/?p=62786 Continue reading "New York and California divested pensions from hedge funds, can RI?"

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California, the state Gov. Gina Raimondo was visiting for a fundraiser to promote her pension policies, and New York have recently divested from high-risk, high-cost hedge funds like those the Rhode Island fund invests in.

One New York City official in an April 14 Reuters story said of hedge fund managers, “Let them sell their summer homes and jets, and return those fees to their investors.”

The board of the New York City Employees Retirement System (NYCERS) voted to leave blue chip firms such as Brevan Howard and D.E. Shaw after their consultants said they can reach their targeted investment returns with less risky funds. The move by the fund, which had $51.2 billion in assets as of Jan. 31, follows a similar actions by the California Public Employees’ Retirement System (Calpers), the nation’s largest public pension fund, and public pensions in Illinois. “Hedges have underperformed, costing us millions,” New York City’s Public Advocate Letitia James told board members in prepared remarks… NYCERS had $1.7 billion invested in hedge funds at the end of the second quarter 2015, according to its financial report. That amounted to 2.8 percent of total assets and was the smallest portion of its ‘alternative investments’ portfolio, which included $8.1 billion in private equity.

hIFE24_8_400x400This begs the question: when will General Treasurer Seth Magaziner do likewise?

To help me parse through this further, Ted Siedle, who is now working on his third forensic audit of the pension, this time dealing with the real estate investment portfolio, sat down with me for an interview. He compared the pension scheme to “nothing Buddy Cianci would have ever dreamed of.”

Click the player below to listen to my full interview with Siedle

“My sense is that, from some some comments I have seen attributed to Seth Magaziner, is that he is preparing to distance himself from at least the Governor’s hedge fund gamble with pension assets. So it appears that he is moving from a ‘stay-the-course and incrementally fire poor performing hedge fund managers and replace them with promising hedge fund managers and make the case that the good outweighs the bad’, moving to an approach where he says either he will abandon the hedge fund strategy altogether or, going forward, or he will jettison perhaps half of the hedge funds and keep the remaining.

Siedle added, “But I think he’s making noises like he may make a bolder move to distance himself from the investment strategies that the Governor implemented. I think that Magaziner is heading in a better direction. I am not hearing a clear indication that his predecessor was wrong about anything and his predecessor was wrong… The massive benefit cuts and the massive investment in speculative hedge funds, high-risk high-cost hedge funds and private equity funds, was a foreseeable disaster, it was foreseen by me, I wrote about it before the strategy had been even fully implemented. Warren Buffett warned this was something that should not be done.”

Projected savings from pension cuts could soon be evaporated by poorly performing hedge funds, Siedle said.

“The benefits were cut to save $2 billion over the next twenty years. Within four or five years … the pension’s lost probably about $2 billion. So all of the projected savings have been, I suspect … will have been eliminated by foreseeable losses. So this has been probably the most disastrous investment decision ever made in the history of Rhode Island.”

He said, “So what I would submit a responsible, courageous State Treasurer would do would to be to call out that this was a horrific mistake, but I’m not hearing that. I’m hearing a distancing but not a mature, responsible response.”

To further clarify what Siedle feels about Magaziner’s time on the job, just look to his recent writings for Forbes:

At 31, Magaziner—lacking any meaningful investment experience—somehow convinced voters in 2014 that he could competently oversee the massively underfunded, embattled $7 billion state pension. Talk about chutzpah—a kid whose personal income the year before assuming office was reportedly approximately $5,183 (yet he somehow loaned his campaign $550,000)… Not only has Magaziner failed to follow through on his transparency promises, despite five years of dismal hedge fund performance at the pension he oversees, he remains committed to Governor Raimondo’s secretive, costly deal with Wall Street.

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How is Raimondo’s pension policy impacting retirees? http://www.rifuture.org/how-is-raimondos-pension-policy-impacting-retirees/ http://www.rifuture.org/how-is-raimondos-pension-policy-impacting-retirees/#comments Fri, 25 Mar 2016 12:28:25 +0000 http://www.rifuture.org/?p=60578 Continue reading "How is Raimondo’s pension policy impacting retirees?"

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RIRTASources within the Rhode Island public sector retirees community have come forward with a survey, taken of a demographic of former public sector employees, that is striking in conclusions for the wider public sector retiree population and future ones.

The survey of the Rhode Island Retired Teachers’ Association was sent to 603 members and 247 members responded. This cohort was from age 58 to 96 and had 36 respondents living out of state.

6 questions were asked. We have eliminated question 2 and 3 as they were poorly worded.

Question 4 asked how they keep current with local and state news (Newspaper, Radio, Television)

Two remaining questions were:

Are you in favor of more open information from the RI State Treasurer about pension investments and fees? Yes or No

All 247 responded yes

Has the loss of the yearly COLA had a negative impact on your standard of living? Yes or No

230 responded yes

Is it important the RIRTA continue to investigate the RI Public Pension Fund for possible criminal mismanagement? Yes or No

Again, all 247 responded yes

Finally we asked “In a few sentences, please tell us how the new pension law (loss of COLA) has impacted your life.” Following are some of the comments:

Believed the COLA/pension was a guarantee-thought it would be wisely invested.

A sad ending (COLA loss) to a job I loved.

Rent goes up! Healthcare goes up! Check does not.

I am chipping at my savings to keep pace with rising taxes, insurance, goods, fees etc.

I have no hope that my pension alone (no COLA) will keep me financially viable.

Mentally for sure. Am I going to have enough money till the end? How long will I be able to stay in my house? All the same concerns I heard from my Mothers’ generation.

It is like living in Limbo and the future is scary.

I cannot be a consumer anymore. The bottom line is there is no expendable income to support out local businesses, charities and nothing for political contributions.

Have discussed with my wife the advantage of moving out of RI to a state that will not tax my pension.

I made my decision to retire based on the 3% COLA…..I don’t have the funds I thought I could count on.

The comfort level we anticipated for us through our elder years has been stolen from us.

There are over 20,000 of us suffering our own recession.

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The sudden need to defend Raimondo’s pension plan is intriguing http://www.rifuture.org/the-sudden-need-to-defend-raimondos-pension-plan-is-intriguing/ http://www.rifuture.org/the-sudden-need-to-defend-raimondos-pension-plan-is-intriguing/#comments Sun, 13 Mar 2016 18:00:42 +0000 http://www.rifuture.org/?p=60236

mcnamara
Joseph McNamara

Prominent public figures are appearing on taxpayer-funded television to shape the discourse about the pension heist after the media has been flooded with information from reputable sources that question the need for Raimondo’s intervention. It’s no surprise that Michael Riley and Brown University’s Wendy Schiller, along with Edward Achorn, are defending these efforts, they are neo-liberals, but Democratic Party Chair Joseph McNamara should be seriously interrogated for this: he is supporting the impoverishment of senior citizens while the Governor seemingly profits off the shady and not-so-blind trust that the pension is invested in.

Riley does provide some useful commentary. He emphasizes that the pension is invested in a bunch of junk commodities that are going to cause trouble down the road. What he does not mention is that the pension will not return to viability in the future because of the outrageous fees being billed to the pension fund by the hedge fund managers.

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Raimondo’s pension plan has cost up to $2 billion so far http://www.rifuture.org/raimondos-pension-plan-has-cost-up-to-2-billion-so-far/ http://www.rifuture.org/raimondos-pension-plan-has-cost-up-to-2-billion-so-far/#comments Sun, 06 Mar 2016 13:00:09 +0000 http://www.rifuture.org/?p=59781 Gina RaimondoWhen Gina Raimondo told voters that the public pension fund was in trouble, she promised to save taxpayers $4 billion over the next 25 years. But after reviewing the more recent audit by Ted Ted Siedle, it is apparent that promise has not come true and instead up to half of that promised savings has gone into the pocket of Wall Street.

Describing Raimondo’s investment strategy as “flawed”, he writes:

In other words, during the former Treasurer’s tenure, gambling in [high-risk and hedge fund-based] alternative investments cost [Employee Retirement System of Rhode Island] ERSRI stakeholders almost $1 million a day. Total preventable underperformance losses identified in this report amount to nearly $2 billion. Ironically, thanks to Raimondo’s “pension reform” the sustainability of ERSRI is more precarious than ever. [Emphasis in original]

What’s more, all the warnings were presented in the mainstream press and other venues well in advance. But rather than acknowledge these problems and save what remains in the pension, current Treasurer Seth Magaziner has soldiered on, refusing to cooperate with Siedle’s investigations and doing serious harm to public disclosure laws in the process. Make no mistake, the history books are going to mark Raimondo and Magaziner alongside the Patriot Act as the most damaging things to happen to the public’s right to know in the past century.

The fact we have yet to hear from the local level of checks and balances that are supposed to be created in offices like the Attorney General or the General Assembly only suggests either a lack of willingness or knowledge that they might be implicated also when the axe falls. How one can say nothing knowing that we are in the midst of the greatest financial crisis in Rhode Island history?

Of course, who in the non-government sector is in on the scam? According to Siedle, the real estate portfolio of the pension, which he is going to be auditing next, is performing abysmally. Could that portfolio be linked to certain local property magnates who are known to be political power players also?

Until Siedle and the feds come forward with further information we will not know.

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How we all will pay for Raimondo’s pension “reform” http://www.rifuture.org/how-we-all-will-pay-for-raimondos-pension-reform/ http://www.rifuture.org/how-we-all-will-pay-for-raimondos-pension-reform/#comments Sun, 28 Feb 2016 17:49:09 +0000 http://www.rifuture.org/?p=59564 cost-of-living-chart

The annual Cost of Living Adjustment (COLA) is one of the most vital elements of living on a fixed income. If things are moving smoothly, the recipient of benefits, be it their retirement plan or Social Security disability insurance, is given a COLA that compensates for inflation or the rise of costs for things like heating fuel and food.

But imagine if, after putting in years of hard work at an honest job, the administrators of your retirement plan told you to go blow, that you were a selfish leech who should have known better than take a public sector job, and that there would be no more COLAs for you?

Welcome to the plight of the retired public sector worker in Rhode Island!

The Rhode Island Retirement Security Act of 2011, a law loaded with more hyperbole than honesty, forbade any future COLAs from being given to retired teachers, janitors, and thousands more people who had done an honest day’s work for decades only to be screwed over by a legislature full of ne’er do well legislators and a Treasurer, now Governor, who used confusing polysyllabic verbiage to occlude the building of a pipeline from the Rhode Island pension fund into the coffers of former Enron traders and a host of other dubious figures on Wall Street who have never done a day’s honest work.

It is time to talk seriously not just about the case of the missing COLAs but what is going to happen when people cannot dip into their savings anymore to make up the difference in their monthly budgets.

Are we supposed to be mum when droves of retired public employees are lining up at the Food Stamps office? Should we be impressed when the Baby Boomers are spending their final years in destitution? Is part of Raimondo’s plan having these seniors taking out loans from her friends on Wall Street that they might not be able to pay back?

The systemic ripple effect caused by this 2011 law is going to impact this state in a negative fashion for years to come and we will all be paying for it.

mcnamara
Rep. Joe McNamara

Perhaps one of the doors to begin asking questions at would be that of Rep. Joe McNamara, the Chair of the Democratic Party. McNamara spent his career in the Pawtucket school system and yet we hear nothing yet from him about restoring the COLAs that would be going to his mailbox. Why is beyond me, but I do know that Mao Zedong would call that a contradiction.

Regardless of one’s political orientation, repealing this law should be made an election year issue. If you are a self-described fiscal conservative, it makes perfect sense to want to reduce the need for social safety net public benefits. If you are a liberal, it is about restoring the social contract and upholding the state’s side of a bargain it made with honest working class people. If you are someone who is opposed to corruption, it would clean the clocks of several dirty politicians that might be benefiting from the pension heist. The only person who might not benefit is myself, who would have less muck to rake, and Gina Raimondo, who might see her dubious blind trust stop sending her fat checks every month.

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An interview with Ted Siedle about the myth of Gina Raimondo, working class hero http://www.rifuture.org/an-interview-with-ted-siedle-about-the-myth-of-gina-raimondo-working-class-hero/ http://www.rifuture.org/an-interview-with-ted-siedle-about-the-myth-of-gina-raimondo-working-class-hero/#comments Fri, 12 Feb 2016 13:29:46 +0000 http://www.rifuture.org/?p=58777 Continue reading "An interview with Ted Siedle about the myth of Gina Raimondo, working class hero"

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For years, Gina Raimondo has engineered a deceptive image for herself as a working-class Rhode Islander who broke out of the blue collar and got lucky while staying loyal to her proletarian roots. In one of her campaign ads, she goes for the heart by wandering around the factory her retired father worked at, pulling the heartstrings as if this were Frank Capra’s dream production. All she needed to make it complete was having one of the kids chime in at the end something about how teacher says every time you hear a bell ring an angel gets its wings.

What a farce.

This sham image has been one element in one of the biggest heists in Rhode Island history, a scheme that every tax payer is financing while she potentially profits! Without this Capra-esque smoke and mirrors charade, Raimondo would not just have lower public appeal, she would not be able to function as what she really is, a confidence artist for Wall Street.

Ted Siedle, the forensic auditor who has just completed the crowdfunding of a third investigation that will look into the real estate portfolio of the pension fund, was kind enough to share his thoughts on his investigations, including the lack of action by Seth Magaziner to address these problems.

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How did this happen?

There were some pensions in America after the 2008 economic crash made vulnerable by the collapse of Bear Stearns, Lehman Brothers, and the other firms that Raimondo had ties to. So what she did as Treasurer was use the very real instance of pension instability in other states to claim the Rhode Island pension fund was in deep trouble. Of course, considering that the public sector is one of the largest employers in Rhode Island and thousands upon thousands of people per week are paying into the pension when they accept a paycheck, no one thought to ask how that logic is supposed to work. In any event, Raimondo used some fancy Wall Street lingo to make things seem dire while confusing union leaders who never were in the advanced graduate school math classes she was. And, since she was the Treasurer, she was supposed to be looking out for the best interests of the pension and was smart enough to understand what she said were the sophisticated elements of the public pension fund.

Or so we all thought, especially since Gina is such a working class hero.

But Siedle says it was not so. He writes in his first audit: [F]or the chief fiduciary to a pension to agree to permit investment managers to not provide material information [upon request from the public] regarding investment strategies and portfolio holdings related to ERSRI assets they have been entrusted with constitutes a complete abrogation of the duty to safeguard pension assets… [I]f the managers are truly unwilling to submit to public scrutiny, i.e., comply with applicable public disclosure laws, they should not be entrusted with the management of public assets. [Emphasis added] In another article, he writes in italicized bold letter the following:

Public pension funds aren’t sophisticated.

The real robbery is not the initial hit that the pension fund took when it was “reformed”, as the Treasurer told us. Instead, it is a weekly sum total of exorbitant and uncalled for service fees, significantly higher than industry standards, that prevents the pension from rebounding in a timely fashion. Every day that a teacher, firefighter, policeman, or other public sector employee who pays into the pension fund gets their check, they see a deduction made for the pension on the pay stub.

And every deduction should be read as a literal sweetheart card sent directly to Wall Street, sealed with a kiss by Gina Raimondo. To add insult to injury, the potential returns from Raimondo’s not-so-blind trust that she got the state to invest the pension into under not-totally-honest pretenses is contributing regularly to her personal wealth. Siedle writes “a significant portion of the [then-]Treasurer’s wealth and income relates to shares she owns in two illiquid, opaque venture capital partnerships she formerly managed at Point Judith Capital—one of which she convinced the state to invest in on different, less favorable terms.

This has resulted in the cost of living adjustment (COLA) payments for retirees to be stopped by the Rhode Island Retirement Security Act of 2011 while Wall Street is boasting about a recovery that is funded by public money! The 2011 law said that the COLAs would return after the pension returns to 80% viability. But with all these fees, the only person being given an adjustment here may be Gina Raimondo!

And since it is obvious the Magaziner is not doing anything about this, nor the Attorney General, the operative question then becomes who else is in on the scheme? How many Democratic and Republican Party members who boast about this heist as Theresa Paiva Weed did in a recent story by Steve Ahlquist are actually collecting checks from the firms profiting off the pension? Is it just ironic that the recent Brookings Institute report on Rhode Island names as potential key success industries economic sectors known to be financed by firms like Point Judith Capital and the Tudor Investment Corporation that turned Raimondo’s firm from a bit player into a respectable enough outfit to make a bid for the pension?

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