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Let’s Not Politicize It?

The Miami Herald reports on another example of unreality: Proposal to expand oversight of Florida’s pension fund is blocked

Sink said having only three elected officials oversee Florida’s pension fund is inadequate — a flaw she said was exposed in the 2007 pension fund “crisis” that led to a temporary freeze on withdrawals from a local government investment pool and resignation of the fund’s executive director.

She proposed expanding the board overseeing the $120 billion fund to include an expert in investments as well as a representative of the more than 1 million beneficiaries, mostly retired employees of state and local government, that rely on the fund’s solvency for a secure retirement.

Tom Gallagher, Sink’s predecessor as CFO and a 2006 Republican candidate for governor, appeared at the meeting in the unusual role of a citizen offering testimony. He vehemently opposed Sink’s proposal, saying it would politicize pension fund decisions.

“You shouldn’t be looking for someone else to blame things on,” Gallagher said. “The three of you should take the responsibility you took when you were elected.”

So, adding two people, one with expertise in the matter, and another who is directly concerned with the results, to the decision making process is “politicizing”, whereas, investing billions with an investment company whose CEO is the cousin of a governor from your party, a firm which then hired that governor when he left office, is a reasonable non-political practice?

Gallagher was one of the three people who made the decisions that resulted in the 2007 meltdown because of the investments through Lehman Brothers. He has a lot of damn gall to show up and comment on efforts to clean up the mess he helped to create. I must have missed the deep personal apology Mr. Gallagher made when he took responsibility for what happened 😈

2 comments

1 Jack K., the Grumpy Forester { 12.10.09 at 10:50 am }

…hmmm, I think I’m beginning to discern a pattern of behavior by Republicans at all levels of government in the aftermath of disasters that they created…

2 Bryan { 12.10.09 at 12:10 pm }

You need a total government lock-down to understand what the “2007 crisis” was. This fund was used like a money market account, a practice that Gallagher encouraged. Many of the smaller and poorer towns and counties in the state put their tax revenues in the fund, and then withdrew them as needed to pay their bills.

The fund was paying a good interest rate, so it was a reasonable thing to do, if you didn’t know that Lehman was gambling, not investing, the money.

When the crisis hit, the account was frozen. The smaller jurisdictions couldn’t get their money to make payroll or pay their utilities, and there was no clear time limit on how long their money would be tied up. They couldn’t simply get a short term loan, and any loan takes months because of the laws in place.

People didn’t receive their checks, and in the case of those with direct deposit, there were thousands of over-draft charged by banks, because people assumed the deposits were made. It was a mess all over the state.

No impartial, financial manager would have allowed a client to put that much money in a single investment that was as risky as the Lehman fund that the state bought into.

None of the politicians showed any contrition, because Bush and Gallagher were out of office, and Charlie Crist, who was attorney general at the time of the decision, essentially claimed ignorance. The fund manager resigned, but that was a scapegoat move.

Alex Sink, the current chief financial officer and a candidate for governor, was a banker before entering politics. She was an old school banker, and didn’t believe in “modern innovations in finance” like derivatives. She is trying to put things on a financially conservative footing, but that would interfere with using the fund to attract support for campaigns, or to reward support.

Sorry to rant, but this stuff still has the ability to piss me off.