A New York law to end to Wall Street’s pension ripoff
The “Shield of Boringness” — c.f. Dana Claire — is a scammer’s weapon. Layering scams in complexity lets villains get away with all kinds of nastiness. Some things are hard to understand because they’re complex, but some things are complex so they’ll be hard to understand.
In finance, this is sometimes called MEGO: “my eyes glaze over” — complex scams designed to bore their victims into submission. All of us are vulnerable to MEGO, because there’s only so many hours in a day and at a certain point, your eyes just start to slide over the legal mumbo-jumbo without any of it registering.
For me, the most powerful MEGO is the bottomless scamming of public pensions by private equity firms. In some distant way, I knew that there was something really terrible going on there, and that pension managers and PE looters were colluding to rip off billions, maybe trillions, from workers’ pensions. But despite how awful that is, every time I encountered an article about this scam, I just bounced off it. Just the word CALPERS was enough to send me into a coma.
But finally a piece of reporting has penetrated the Shield of Boringness, perhaps because it’s a rare (unprecedented?) piece of good news about this whole awful mess. Writing for The Lever, Matthew Cunningham-Cook reports on New York A09948, “to amend the retirement and social security law, in relation to disclosing certain investment managers and investments.”
The things this law would require are a kind of inverse-mold of the scam itself, like flipping a doctored photo to negative to spot the tampering. If this law passes, then, for the first time, the Wall Street firms that handle New York’s $269B public pension would have to disclose the cozy — and nakedly corrupt — contracting terms they arrive at with the funds’ overseers. For example, it would require disclosure of when fund managers charge private jets to the pension fund:
But gold-plated expenses are just the obvious part of the corruption. The good stuff is pure…