There is a group of marks out there that is big enough, and if organized, could be strong enough to level the playing field for the investing public. State pension fund trustees in aggregate control trillions of dollars in investments. If they were organized along with trustees from foundations and endowments across the country, they could influence legislation that would directly affect the investment community. The only thing standing in their way is their own ignorance.
Of all the state pension fund trustees, probably less than ten percent have any background or knowledge or experience at the institutional level of investing. As a result, this group, that speaks for millions of pensioners and state workers, does not even realize the power and force they could represent for change in the regulation and oversight of the investment community and how business is done on Wall Street.
Perhaps when a few big states, starting with California, realize that their pension funds are being put at unnecessary risk because the greedy want the opportunity to have a feeding frenzy every few years or so, then perhaps their political/economic power will be directed towards better regulation and oversight. When you assemble 50 state pension funds to include state workers, teachers, school employees, police and fire workers, plus all the city pension funds, you now are talking about the financial well being of millions of people. Who have I left out?
The poster child of this last crisis, for me at least, is the sub prime mortgage mess. If ever there was a crisis that could have had the plug pulled on it at the beginning, it is the sub prime mortgage bonds that were packaged (securitized), rated by the rating companies, underwritten by the investment bankers and sold by the institutional brokers to pension funds and other institutional portfolios. At every step of the process that turned these mortgages into the disastrous sub prime mortgage bonds that they became, a red flag should have gone up. Why didn’t it? The answer is simple, greed. Everyone associated with the manufacturer of the sub prime mortgage bonds was too greedy to pull the plug or raise the red flag. Concern for the investing public is not their problem, let the buyer beware.
Time for a personal story. Back in the late 1980’s when I was working as a broker between portfolio manager jobs, I had the opportunity to witness an underwriting of a fixed income product that was listed on the New York Stock Exchange and went belly up within six months after its initial sale at $10 a unit. The name of the product is not important, but how the brokerage firm that I was with behaved when I asked a question about the product is. We were assembled for a luncheon meeting in the conference room and sandwiches were brought in. The guy from the home office involved with the underwriting came out to make the presentation while we were wolfing down our sandwiches. In that the product was essentially a fixed income product, and in that I had cut my teeth on the fixed income markets, I thought I should understand this product pretty well. After the presentation, I raised my hand and asked a question. My question was not answered, but I was told that this product was so good I could sell it to my grandmother. Fortunately for me both my grandmothers were already dead as the loss they would have suffered in less than six months would have probably killed them. This is the kind of greedy shit that went on and does go on on Wall Street.
Unfortunately, the politicians do not have the background or knowledge or political motivation to put a stop to this shit. But, if the state pension trustees and foundation and endowment trustees would organize, they could represent a force that could put in place the kind of regulation and oversight that is needed to protect the pension assets, that run into the trillions of dollars, from unnecessary risk resulting from pure greed.
I am talking about the elimination of fraud, plain and simple. One of these days the right people may wake up and realize that they have a responsibility to millions of working people, and then take the necessary action to deliver the kind of regulation and oversight the working people of America deserve.
Stay tuned.
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Once again, the voice of reason goes wanting for the proper audience. I wish someone other than me, someone with more power, influence and standing, were to be reading this and getting the same kind of understanding of the situation that I, as an uneducated and essentially uninformed member of the 'general public', have been able to derive.
I admit that it would be nice if my writings were being read by the high and mighty, but to tell you the truth, I think there are many people with my background in investments and the markets that know what is needed. It isn't like I discovered a new element, or a cure for cancer. People know what needs to be done, but, like Obama says, they are not going to give up their power without a fight.
In the news today, it took the Attorney General of the State of New York to get Citicorp to do the right thing and give people that thought they were investing in liquid tax free notes, like a money market fund, their money back. The heads of this corporation knew what was the right thing to do, but it took the power of the Attorney General to make it happen. Wall Street practices need to be revisited, and I don't think that is a secret. But, the powerful are not going to give up their power and walk away from this fight. How many years did it take the philosophy of rule by divine right of kings to become rule by the House of Commons? This fight is very similar. The very wealthy will drag this fight out for as long as they can. But, I believe if the pension fund trustees ever got organized from around the country, their power could reshape the way business is conducted on Wall Street.
I "idolized" Elliot Spitzer while he was the Attorney General of NY. He was going after the criminals in every area of business. I always thought, "where is his twin in Washington". Our federal government was silent on every unethical issue.
But, alas, my "hero" ended up being a rug-rat himself.
Today I heard a man on CNBC actually say that because of the recent decision against Citicorp that New
York City may see the investment banking business move out of the United States. What a bunch of HORSE SHIT!! With trillions of dollars in pension assets here in the United States, the investment banking business isn't going anywhere. What a sorry ass excuse to not institute better regulation and oversight.
In our society today, individuals will say anything to protect their beliefs, their future, their prosperity. These ideals no longer even have to be true nor do they have to promote the general welfare of the country. I have been totally amazed with top business executives or high-level politicians that have blinders on or lack common-sense or decency. Then, I see many "average" individuals just buy all the crap they hear and begin to comment "we can't have more regulation...the _______ just wants to increase taxes and take away our rights".
McCain and Obama initially stated no "mud slinging" in this campaign. Recently, all I hear from each is how "terrible" the other candidate is. This is enough to turn anybody away from politics. We seem to have lost the "art" of discussion and resolution for the common good of all. I want the candidates to tell me how they would solve a problem, not what the other guy is doing wrong.
My prayers go out to all the young people today in America.
There is a whole lot of truth in what you said Winslow. I have nothing to add, you covered my feelings exactly.
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