Dan Gaffney had Chip Flowers on his program yesterday to talk about the press release that Chip sent out trumpting how much money the Treasury has made for the state. The conversation rapidly gets to other subjects, but it occurs to me that even Chip can no longer keep track of his own spin. You can listen to the interview here, it’s about 10 minutes long.
First, Dan Gaffney asks Chip what is the basis he’s calculated the $43M he says the investments have made — which is a damned good question. Chip tells him that $1B is liquid, $200M is in a Rainy Day Fund and $800M is invested. And apparently he says that it is the $800M is making the money for the State. But then what’s this about, then? This graphic from the Treasury’s 2013 report says that the basis of the investment pool is $1.8B.
So if it is a $2B basis, the $43M is a 2.15% return. Which is a decent return given the policy constraints that govern the investment of the state’s funds here. If you look at Section IV of that policy document, you can see that the range of investments even allowed for state funds are pretty conservative. (And which is why the drama over investment managers was such a sham.) But then again, if you look at this same document, Section II, you’ll find investment guidelines for all three of the state’s cash reserves — not just for one account, which indicates to me that there is more than $800M being invested. Which was always the problem with these puffed up reports and press releases — you never get anything that you can actually check.
Second, Gaffney asks Chip about this transparency he’s been advocating suddenly. Specifically, Gaffney asks Chip why he won’t disclose who he met with in Alaska if he’s so interested in transparency. Chip tells Gaffney that *his* secret meetings are justified — mainly because he says so. But in saying so, he says to Gaffney that he was meeting with lawyers — even though his representative told the NJ that it was bankers:
Callahan said Flowers “spent the days following the conference including the Monday prior to his departure meeting with other state treasurers, investment banks and other financial experts. The Treasurer’s travel records have been thoroughly vetted and are available to the public at any time.” Callahan declined to provide details about any of those meetings, or evidence that they were held.
Third — and here we go to a WDEL report — where Flowers takes credit for an investment strategy that is actually dictated by the Cash Management Board itself:
Flowers says his conservative investment strategy, which rewards managers based on performance and merit, has paid off. Going forward, he hopes the Cash Management Policy Board, which now has full control over the portfolio by legislative mandate, will follow his lead.
Conservative is the name of the Cash Management Board game and again Flowers just presumes that you’ll never know any differently. Even though he tells this reporter later that this Board repeatedly outvotes him. But while is is being outvoted on strategy, he is nonetheless taking credit for it AND being mad that his strategy isn’t the prevailing one. Someone explain that for me? But this is an odd bit of belligerence:
“As Colin Powell once said dealing with the war in Iraq, ‘If you break it, you own it,’ so that’s my advice to the Board, but we wish them well,'” Flowers told WDEL.
The man who is widely expected to primary Chip is a wounded Iraq War veteran. You’d think that bypassing the Iraq metaphors might be the Communications Directive of the Day.
h/t to multiple anon tipsters