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NYC Mayoral Candidate Mismanged City Pensions for Years

*Jun 07 - 00:05*

Former NYC Comptroller Bill Thompson is looking to vault ahead of frontrunner Bill de Blasio in the city’s mayoral race, but a recent exposée of his tenure as comptroller will do little to help his chances. As Comptroller, Thompson was responsible for handling  investment decisions by the city’s pension systems. Thompson has touted this experience during the campaign, but the New York Times has examined his track record, and what it found isn’t pretty. Not only did New York’s pensions consistently underperform their peers; Thompson frequently used his position to invest city pensions in funds controlled by major donors, which charged the city hefty fees for middling results:

As he oversaw the city’s $85 billion pension system, Mr. Thompson steered the funds into a diverse range of new investment categories, expanding from heavy concentrations in stocks and bonds into private equity, real estate and niche funds. Yet performance was lackluster: nationwide, more than half of large public pension funds outperformed the five city funds’ combined 4.84 percent return from 2002 through 2009, according to a widely used yardstick compiled by Wilshire Associates, an investment advisory firm. Meanwhile, the city’s roster of fund managers, and their fees, tripled—and Mr. Thompson collected more than $500,000 in campaign donations from them. […]

In draft audits prepared in mid-2005, halfway through Mr. Thompson’s tenure, the examiners reported, among other things, that investment decisions were made without the comptroller’s opinion on whether they would meet the funds’ goals; that little attention was paid to expenses; and that investment policies seemed to be discussed only when hiring companies to manage the money, raising concerns that the “the policies might have been adjusted to justify the choice of a particular provider.”

We’ve complained about politicians using pension fund investments for political purposes before, but this takes the practice to an entirely new level. In a state where hundreds of cities are on the brink of pension meltdown, playing games with pensioners’ money for  political gain is a moral failing of the highest order. Pensioners and taxpayers alike already have plenty of reasons to distrust the decisions ostensibly made on their behalf by politicians and fund managers without adding outright cronyism and graft to the mix. Unfortunately it appears that the ugly machine of public-sector unions, politicians and Wall Street that has wrecked pension systems across the country is alive and well in the heart of blue America.

[Bill Thompson photo courtesy of New Yorkers For Thompson]

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  • jeburke

    Be that as it may, Bill Thompson is the only one of the Democrats who is an adult with something resembling the good sense and pragmatic responsibility to govern a major city. The rest are ideological crazies, as well as either corrupt or personally deranged. This might not matter if there were another Bloomberg or Giuliani on the Republican ticket to keep these pygmies away from power but there is no such person, and the Democrat who wins the primaries, in which perhaps 600,000 people out of 4+ million voters will vote, will be Mayor.

    • jeburke

      I should add two things:

      — The Times “expose” is based on a DRAFT review of the NYC Comptroller’s Office ordered by Republican Governor George Pataki and aimed it Thompson’s predecessor, Alan Hevesi, who served in the office for most of the time examined and who was undoubtedly corrupt, as he was eventually indicted and convicted for conduct as State Comptroller. And in any case, the draft report was just that, a draft. VM fails to mention any of this — quite unfairly.

      — During his tenure as Comptroller, Thompson was generally very supportive of Bloomberg’s economuc development and education policies, which is more than you can say for other Democrars running, particularly the supposed frontrunner, a hardcore ideologue, Bill DeBlasio.

      • Corlyss

        Thanks for the additional info, J. I was about to ask “where was Thompson’s adultness while he was Comptroller?” Generally speaking, it is a monumental mistake to put pols in charge of pension money. The Feds fortunately didn’t make that mistake when they set up the Thrift Savings Plan ( that was designed to give employees and pensioners some control over some of their money as a supplement to the retirement system inaugurated in 1983. They left management of the funds in the hands of professional money managers.

      • USNK2

        You forgot to mention to ViaMeadia:
        1) spellcheck your titles, and
        2) the NYT endorsed Quinn, and is deliberately trying to taint Bill Thompson to get Quinn into a run-off with deBlasio, who has DailyBeastNewsweek now performing a transformation of deBlasio from ideologue to political genius (not convincing, but…don’t want the stock markets crashing on 9/11 if deBlasio wins with 40%+)
        All five of Giuliani and Bloomberg’s wins were due to overwhelming majorities from Queens and Staten island.
        What concerns me is that ‘Cats’ already has the Liberal party line, which could split the NOdeBlasio vote.

  • Pete

    NYC is devolving back into the Dinkins type era.

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