Obama bundler says he lost $25 billion of N.J. pension funds
By Editor
A New Jersey pension fund run by one of Barack Obama’s earliest and biggest campaign fundraisers/bundlers has lost $25 billion -- including $9 billion in October, according to a report issued today by a state panel. The New Jersey Investment Council, chaired by hedge fund manager Orin Kramer, says that the value of the state pension fund has shrunk from $82 billion in July to $57 billion.
Kramer, 63, a former White House aide in the Carter administration and a partner at Boston Provident, was named to head the state retirement benefits panel by then-Gov. James E. McGreevey in 2003. The state Division of Investment is one of the ten largest public fund managers in the U.S., with a market value at of $70.7 billion as of the end of September, according to the Treasury Department website. The fund provides retirement benefits for more than 700,000 current and future retirees.
U.S. News and World Report ranked Kramer as Obama's #3 bundler last August, just behind Lehman Brothers' Christine Forester.
State Sen. Bill Baroni (R-Hamilton), who represents the district with the largest number of state employees, called it a "historic breakdown" in the state pension system.
Less than three weeks ago, Kramer pushed the investment council to add $94 million in pension funds to their $450 million stake in the BlackRock Inc. Kramer said the hedge fund needed to protect cash reserves to avud selling part o their holdings.
BlackRock told employees in an internal memo on Monday that the firm would cut jobs to improve profitibility. The fund's profits for the third quarter dropped 15%.
After the election, Kramer told the Philadelphia Inquirer that Obama should consider Gov. Jon Corzine for Secretary of the Treasury. There's probably no elected official in the country remotely in Jon Corzine's league in understanding financial markets,” said Kramer, who was the first to suggest that Corzine enter politics as a U.S. Senate candidate nine years ago.
On Monday, State Sen. Joseph Pennacchio (R-Montville) asked Kramer’s council to explain why it approved a $178 million pension fund investment in Lehman Brothers even after learning that the firm had lost more than $115 million in the previous quarter.
"New Jersey's State Investment Council and Division of Investment have provided no details on how they came to approve an investment in Lehman Brothers that lost more than $115 million in less than four months,” said Pennacchio, a conservative who sought the GOP nomination for U.S. Senate earlier this year. “State officials were asked to explain why they put state money at such risk at a time when most investors were shunning Lehman. Their non-response was that the state couldn't comment because of the possibility of litigation. Yet months later, the state hasn't told the public if or when it will file a lawsuit against this Wall Street investment bank.”
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Syndicate
Wow
There's not much more to say these days.
$25 billion lost
Okay, so now he'll be fired and replaced with someone who will do a better job...right? Someone who is not another reckless Wall Street high flyer ala Corzine? Someone who has had a conservative approach to investing all along? Just kidding. There are plenty of managers who saw this coming. Why not this genius?
his 401 K
Just wait until Obama steals his 401k
Other peoples money
I bet he didnt invest a dime of his own money in this pig.
nj politicians side and the right side
Kramer disputed a report that appeared on PolitickerNJ.com last week that contended he presided over the loss of $25 billion from New Jersey’s pension fund. Upon taking the post in 2002, Kramer said that he recognized the need to for the state’s multi-billion dollar fund to diversify its holdings. New Jersey, he said, stood alone in the proportion of stocks to other assets that its pension fund held.
“The reason that I joined the council is because New Jersey had the most undiversified, equity-heavy portfolio of any major comparable institutional fund in the country,” said Kramer. “Compared to every major endowment, corporate pension fund and public pension fund, New Jersey was uniquely undiversified and heavily dependent on equities.”
Kramer has faced a major hurdle in his quest for diversification, however: state worker unions, most notably locals for the Communications Workers of America – despite the fact that most experts advocate diversification as a safer method than heavy investment in securities.
“Maybe the world is wrong and these people in New Jersey know something they don’t know at any major university or any major corporation or any major public fund, but what they believe in isn’t believed in or taught at any university,” he said.
The council has made some progress, however. In 2002, 66 percent of the portfolio’s assets were in stocks, which have been the hardest hit in the economic downtown. Today, that number stands at 48 percent.
Moreover, Kramer said, to attribute the loss to any individual is incorrect. The New Jersey Investment Council establishes broad policy and asset allocation, but does not pick choose managers or dictate investments. Since the council does not make specific decisions about which assets to purchase, there is no way he could have pushed it to invest $94 million in BlackRock, Inc.
“It’s well known that the council does not make individual investment decisions, and therefore nobody including me pushed it. We’ve got clear policies and the statement is just false,” he said.
Kramer said that the State Investment Council primarily sets the asset allocation guidelines for the Division of Investments, noting that the decisions on manager selection and security investments are made by the decision's staff, which is led by Director Bill Clark.
Kramer also said that the $25 billion figure is not entirely accurate. Some of that loss was the result of payouts from the historically under-funded pension system. As for the rest of the loss, it’s next to impossible to find any fund that’s making money in the current economic climate.
“Everything has lost money in a way that hasn’t happened since the depression. But the things we diversified into have lost less money than equities,” said Kramer.