It’s a new year, so there’s a new piece by International Business Times‘ senior editor for investigations, David Sirota, taking on Gina Raimondo‘s dismal record in pension reform. This piece isn’t getting a lot of attention locally, which is a shame because it actually explains the pension reform/hedge fund situation quite nicely. The accepted story among the most politicians is that pension reform was necessary. As Gina Raimondo said in the Wall St Journal (quoted in Sirota’s piece) “Don’t be mad at me. Be mad at people who made promises that were unaffordable.”
However that may be, we certainly didn’t need pensions locked into hedge funds that have, notes Sirota, “generated big revenues for Wall Street firms, but only middling returns for a $7.6 billion pension fund on which more than 58,000 current and future retirees rely.”
When retiree Diane Bucci and others began to dig into the poor performance of the hedge funds, “they learned of a federal review showing that roughly half of all private equity firms are charging hidden fees, and they saw a hedge fund industry whose returns have failed to keep pace with the stock market. When they dug deeper, they stumbled onto an even more disturbing revelation. What they found, they say, is evidence that some investors can obtain special rights that may let them secretly siphon money from the state pensioners’ retirement savings.”
Here’s the link to the full story, well worth a read:
Wall Street Fine Print: Retirees Want FBI Probe Of Pension Investment Deals