Lehman Brothers

The decision to make a risky investment of the $180 million magnitude of the Lehman purchase was clearly not made without the input of some appointee of the Corzine administration. Yet, one year later, the Treasurer continues to insist that the investment was solely the decision of low-level employees of the Division of Investment who are being demoralized by questions about the $118 million loss.

New Jersey Investment Council Chairman Orin Kramer says the state's pension fund - under attack by Republicans for losing $118 in a Lehman Brothers investment - lost less over the last year than the funds of the 30 other states who make the information available on the Internet.

Kramer made the argument in a letter to state Sen. Joseph Pennacchio (R-Montville), who has been a vocal critic of the State Investment Council's decision to invest in Lehman shortly before it collapsed.  It was a response to a letter Pennacchio wrote to State Division of Investment Director William Clark to question why the state would not reveal which in-state companies the fund invested in as part of the two-year-old NB/NJ Custom Investment Fund program. 

In an interview with PolitickerNJ.com, Kramer said that the ranking is vindication of his strategy to diversify the state's holdings - a strategy that the Lehman investment ultimately came out of -- and that politicizing the council will jeopardize its future performance.

"The portfolio diversification that made that possible has been under political attack," said Kramer.  "When people make the pension system a political football, seeing that kind of ranking again becomes harder and harder to achieve." 

Although the state's pension fund lost 14.2%, or $10.9 billion, between June, 2008 and June, 2009, the average for the other states was 18.8%.  North Carolina tied New Jersey, also losing 14.2%. 

The state is currently suing Lehman Brothers' former executives and directors, alleging that the company misrepresented its financial position when the state made its $182 million investment in Lehman shares. 

"An irony about Lehman Brothers is that a major source of New Jersey's outperformance arose from underweighting financial services companies.  For every investor, some decisions produce atrocious outcomes," wrote Kramer in his letter to Pennacchio.  "While the State believes it was misled in making that decision, Lehman was obviously one of those atrocious outcomes."

Senator Joseph Pennacchio, a member of the Senate Budget and Appropriations Committee, issued the following statement after the committee chair denied him his right to question the state Treasurer about why he has refused to provide a full accounting of the state’s disastrous losses on an ill-advised investment in now-bankrupt Lehman Brothers:

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The state's suit against Lehman Brothers will not provide the answers that taxpayers and retirees need to be certain that the state is competently managing the billions of dollars of hard earned money that is being placed in its care.

The state Treasurer should release all documents on the state's reckless $178 million investment in Lehman Brothers, not nickel and dime senators who request information.

Hedge Fund millionaire Orin Kramer and Obama national finance director Julianna Smoot. A state pension fund headed by Kramer says they have lost $25 billion since July

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.

CLICK HERE TO READ KRAMER'S SIDE

Other pension funds are suing Lehman Brothers to recover lost investment income. Where is New Jersey's lawsuit?

Does State's Exit from Failed Lehman Brothers Investment Hold the Key to Determining Why the Pension Council Became Involved in the First Place?

State Senator Joe Pennachio (R-Morris, Passaic) questioned today if the same person or persons who determined that New Jersey should rid itself of Lehman Brothers Stock were the same individuals who had the pension fund invest $178 million in Lehman in the first place. New Jersey subsequently lost $115 million of the $178 million investment in three short months. This occurred at a time when Lehman was being rejected worldwide for capital. New Jersey could have been the last major institution to abandon Lehman, prior to it's bankruptcy.

State Senator Joe Pennacchio asks how two top Lehman executives and one former Lehman executive on New Jersey's investment council could have let the state lose more than $115 million in three months investing in the now-bankrupt Wall Street investment bank.

The possibility of litigation shouldn't block rapid and full disclosure of what led up to the state's disastrous investment in Lehman Brothers.