NY Gov. Cuomo OKs putrid pension fund deals while workers face layoffs, wage freeze
By Deirdre Griswold
Published Jan 8, 2011 9:06 AM
The New York State Common Retirement Fund is the third-largest pension fund in the United States. Money gets taken out of every state worker’s paycheck so that when they get older they’ll be able to safely retire. The law says these funds must be invested securely and cautiously.
That’s how it’s supposed to work. But what happens when Wall Street investment firms decide they desperately need fresh capital and the billions of dollars in the fund are just what the doctor ordered?
They bribe the officials in charge of the fund with millions of dollars to take billions out of the old, stodgy stocks and bonds where these investments earned a little interest and put this money into their sexy hedge funds and other risky investments — just when the whole capitalist market is about to take a nosedive.
That’s what happened in New York, and it cost the retirement fund at least $170 million. It brought down the state comptroller and sole trustee of the fund, Alan Hevesi, and his top political aide, Hank Morris. They and six other officials pleaded guilty to criminal charges related to the kickback scheme.
Several Wall Street firms have been under investigation in this huge scandal, including the highly connected Carlyle Group, a private equity firm that has put such luminaries on its payroll as George H.W. Bush and former British Prime Minister John Major.
But it seems that the bigger you get, the more eager the New York state attorney general has been to cut a deal. So Carlyle paid back to the state $20 million — a pittance for a company that size — and was spared the trouble of ever having to go to court.
The state attorney general who cut the deal with Carlyle was Andrew Cuomo, who became governor of New York on Jan. 1. During his campaign, he emphasized that he was going to get tough with the unions representing state workers and that he was going to bring yet another kingpin in the pension swindle to justice — Steven L. Rattner. Cuomo intends to keep his first promise and axe thousands of workers’ jobs. One of his first acts after his inauguration as governor was to put a year-long freeze on the wages of state workers. But on Rattner, he has already taken a pass.
Who is Steven Rattner? His connection to this scandal is through a company he set up called Quadrangle, which obtained a $150 million investment from the pension fund. Quadrangle has paid $6.2 million to the state for its role in this rip-off — but, like Carlyle, its rich executives have admitted no wrongdoing and have not been charged with any crime. It was all a “gentlemen’s agreement” — they give back what is chump change for them, and then it’s business as usual.
Sweet deal for superrich Rattner
But Rattner left Quadrangle after the state’s investigation started. And although Cuomo in November was talking about making Rattner pay $26 million and possibly face perjury charges, by the end of December the man about to become governor softened. He made a deal where Rattner paid $10 million and, like Quadrangle and Carlyle, didn’t admit to any wrongdoing. Rattner is also barred for five years from having any dealing with pension funds.
Rattner is a major fundraiser for the Democratic Party. He is also now the head of a new investment firm that deals exclusively with the personal fortune of Michael Bloomberg, who happens to be the Republican mayor of New York City. But hey, whether it’s Democrat or Republican, money is green. And Rattner has plenty of it himself. His net worth, according to a financial disclosure report filed this year, was somewhere between $160 million and $500 million.
Two years ago, President Barack Obama named Rattner to head his effort to “turn around” the auto industry. Now General Motors and other corporations are making even bigger profits, having pressured the UAW leadership to agree to tens of thousands of workers being axed and a cut in pay for the rest. Rattner, on the other hand, enjoyed a big celebration from his pals on Wall Street for that.
By the way, Rattner started his career as a reporter for the New York Times.
Bloggers and people who send e-mails to the Times are enraged over Cuomo’s deal with Rattner. Some point out that the $10 million Ratner “disgorged” — that’s the legal term for giving it up without actually being penalized or fined — is peanuts to a man who’s not sure if his net worth is $160 million or $500 million.
What gave Cuomo the right to cut these deals? Had these cases gone to trial, much information about the inner workings of Wall Street and its incestuous relationship with capitalist politicians would have come out. Now these secrets remain buried.
And how come a person charged with stealing $10 or $100 can’t just pay it back? Why is it that only millionaires can do that? People who take $10 or $100 must really need it, but in the eyes of “the law,” that makes them criminals. Two young Black women in Mississippi known as the Scott Sisters have spent the last 16 years of their lives in jail for the supposed theft of $11.
The whole sordid story of Cuomo, Rattner, Carlyle and the rest of this gang is not some aberration. This is how capitalism and its political machinery work. Pamper the filthy rich and squeeze everything you can out of the workers — state workers, autoworkers, whoever can be exploited.
It’s not enough to be shocked and angry. Capitalism has to be uprooted and replaced by socialism. Until that happens, the wealth created by the working class will continue to be funneled into the coffers of the capitalists and their cronies — by hook or by crook.
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