Wall Street is Taking Over America's Pension Plans - The Intercept - 0 views
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Coverage of the midterm elections has, understandably, focused on the shift in political power from Democrats toward Republicans. But behind the scenes, another major story has been playing out. Wall Street spent upwards of $300M to influence the election results. And a key part of its agenda has been a plan to move more and more of the $3 trillion dollars in unguarded government pension funds into privately managed, high-fee investments — a shift that may well constitute the biggest financial story of our generation that you’ve never heard of.
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But Wall Street’s agenda goes beyond any one election cycle. It has been fighting to turn public pensions into private profits for quite some time, steering retirement nest eggs into investments that are complex, charge hefty fees, and that generate big profits for management firms. And it has been succeeding. Of the $3 trillion in public assets currently in pension funds throughout the country, almost a quarter of that has already found its way into so-called “alternative investments” like hedge funds, private equity and real estate. That translates to roughly $660 billion of public money now under private management, invested in assets that are often arcane and opaque but that offer high management and placement fees to Wall Street financiers.
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If all this wasn’t egregious enough, a huge preponderance of evidence suggests that this massive transfer of wealth from public to private management is having a corrupting effect on the political process. Sirota’s reporting seems to have particularly touched a nerve with New Jersey Governor Chris Christie, who has described Sirota as “a hack” and “not a journalist”. It’s not difficult to see why Christie isn’t a fan. Earlier this year, Sirota wrote that… 43 financial firms managing New Jersey pension money have spent a total of $11.6 million on contributions to New Jersey politicians… Many of those donations have gone directly to Gov. Christie’s election campaign … Additionally, many of the contributions came either just before or just after the Christie administration awarded the firms multi-million-dollar pension management contracts. Those 43 firms ended up managing around $14 billion dollars of state pension money, a take that serves as a timeless reminder of the great rewards that can derive from catering to the needs of receptive politicians.
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