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freep: Detroit making toxic pension decisionsBy Theblogprof, Section News
cross-posted at theblogprof
You don't say! The city that is incompetent to run its own affairs, incompetent to run its school system, is also incompetent at making pension fund investment decisions? Really? There have been been a rash of stories, especially in the last year, about questionable investments made by the pension board managers. For one, money being used to fund ventures by (surprise) Kilpatrick backers. Other questionable ventures went belly-up, and the pension system is now under a cash crunch. The Board even got duped into buying the riskiest portions of collateralized debt obligations (CDOs) from Bear Stearns (guess what happened to those this last fall). So is it really a surprise, especially to the Detroit Free Press that more bad decisions are made? Here's today's headline: Toxic waste deal stinks (what a headline! Pulitzer here we come!). Nothing "new" to see at the beginning of the article (corruption, bad decisions, incompetence on full display, yada, yada). Until you get to the end of the article and this pops up:
Now Detroit's police and fire pension board, which has already lost $33 million in the Romulus venture, has agreed to invest another $10 million in the deal if Detroit businessman Dimitrios (Jim) Papas and his mouthpiece Tom Athans can persuade regulators to issue permits to reopen the wells.(emphasis mine)Tom Athens? The husband of do-nothing U.S. Senator from Michigan Debbie Stabenow - THAT Tom Athens? Yup. The very one. RightMichigan has a great run-down on this charletan, and how he and Stabenow are profiting from the very things that Stabenow stands against on the campaign trail. Nice. Looks like birds of a feather really do flock together. Being part of the solution, rather than part of the problem (seems to be the vogue thing to say to anyone pointing out problems in Detroit), maybe this toxic mess (yes - I intended that one - eureka!) wouldn't be such a problem if one thing gets done: Get rid of dinosaur pensions in favor of defined contributions. Let individuals make their own decisions on investment. Then you won't have these political board members making political decisions with your money. Further, these boards are pressed to make risky investments that may potentially yield high returns because the budget of the city seems to always think 10% is the standard year-over-year investment increase. Such unrealistic expectations are par for the course for a city that can't manage its own business very well. Will things change? Don't hold your breath. The firefighters and city employees will be the ones that end up holding the toxic bag!
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