Chris Christie demonstrates a perfect execution of the GOP Grift:
Gov. Chris Christie’s administration openly acknowledged that more New Jersey taxpayer dollars were going to land in the coffers of major financial institutions. It was 2010, and Christie had just installed a longtime private equity executive, Robert Grady, to manage the state’s pension money. Grady promoted a plan to put more of those funds into riskier investments managed by Wall Street firms. Though this would entail higher fees, Grady said the strategy would “maximize returns while appropriately managing risk.”
Four years later, New Jersey has secured only half the promised results. The state has sent more pension money to big-name Wall Street firms like Blackstone, Third Point, Omega Advisors, Elliott Associates and Grady’s old firm, The Carlyle Group. Additionally, the amount of fees the state pays financial managers has more than tripled since Christie assumed office. New Jersey is now one of America’s largest investors in hedge funds.
Christie *told* people he was sending their money to riskier investments, he hired a hedge fund manager to do just that, and the only people making any money out of the deal are the hedge funds. Right? This is how taxpayers are routinely shafted in favor of making sure that cronies are well taken care of, and they are almost always led to the slaughter by one of the *experts*.
Those who originally opposed the state’s shifting of pension funds into hedge funds, private equity, venture capital, real estate and other “alternative investments” see the below-average returns as no accident but an inevitable byproduct of the strategy: The Christie administration has effectively taken money from retired state workers and delivered the cash to Wall Street money managers.
Indeed. A guy in a suit, claiming expertise with big money has the easiest grift there is — promise them bigger returns, tell them that the bigger returns will pay for the higher fees, but make sure you and your pals get paid *first*. The returns will never matter — governments will just cut their losses and those retirees can get jobs at Walmart, anyway.
Those hedge fund managers aren’t all that smart about investing, either:
Had New Jersey’s pension system simply matched the median rate of return, the state would have reaped roughly $3.8 billion more than it did between fiscal years 2011 and 2014, says pension consultant Chris Tobe. Those unrealized gains represent more than New Jersey’s annual budget for its entire higher education system, and more than 10 times what the state spends each year on environmental protection. It is also more than enough to cover the required pension payment that Christie cut. To make up for that $3.8 billion return-on-investment gap, every household in the state would have to cough up roughly $1,200.
And there’s a little bit of pay-to-play here too:
As previously reported by IBTimes, campaign finance records show that employees and others affiliated with firms managing New Jersey pension money made $167,000 worth of donations to New Jersey Republicans since 2009. Employees of those firms have also donated more than $11 million to the Republican Governors Association and the Republican National Committee. Christie is the chairman of the RGA and both organizations spent heavily to support his 2013 reelection campaign.
If we haven’t figured it out by now, run away from any Republican who claims to know how to invest money. Because it will be invested with his pals, leaving you with all of the overdrafts.
What are you interested in today?