David Sirota: Wall Street’s Secret Swindle

[marmar]

from truthdig:


Wall Street’s Secret Swindle

Posted on Apr 25, 2014
By David Sirota


In the national debate over what to do about public pension shortfalls, here’s something you may not know: The texts of the agreements signed between those pension funds and financial firms are almost always secret. Yes, that’s right. Although they are public pensions that taxpayers contribute to and that public officials oversee, the exact terms of the financial deals being engineered in the public’s name and with public money are typically not available to you, the taxpayer.

To understand why that should be cause for concern, ponder some possibilities as they relate to pension deals with hedge funds, private equity partnerships and other so-called “alternative investments.” For example, it is possible that the secret terms of such agreements could allow other private individuals in the same investments to negotiate preferential terms for themselves, meaning public employees’ pension money enriches those private investors. It is also possible that the secret terms of the agreements create the heads-Wall-Street-wins, tails-pensions-lose effect—the one whereby retirees’ money is subjected to huge risks, yet financial firms’ profits are guaranteed regardless of returns.

North Carolina exemplifies the latter problem. In a new report for the union representing that state’s public employees, former Securities and Exchange Commission investigator Ted Siedle documents how secrecy is allowing financial firms to bilk the Teachers’ and State Employees’ Retirement System, which is the seventh largest public pension fund in America.

.......(snip).......

So what is happening to retirees’ money? As Siedle documents, more and more of it is going to pay the exorbitant fees charged by the Wall Street firms managing the pension money.

“Fees have skyrocketed over 1,000 percent since 2000 and have almost doubled since (2008) from $217 million to $416 million,” he writes, adding that “annual fees and expenses will amount to approximately $1 billion in the near future.” ...............(more)

The complete piece is at: http://www.truthdig.com/report/item/wall_streets_secret_swindle_20140425

[xchrom]

1. du rec.

[abelenkpe]

2. K&R

[Squinch]

3. Kick. I'm never going to collect on my tiny little pension, am I?