Rhode Island Governor Gina Raimondo has been tapped to become U.S. Commerce Secretary in the Biden Administration. If her name sounds familiar, it should: Chris Tobe and I wrote about her not quite two years ago. She oversaw the near-destruction of pensions in Rhode Island. Somebody who cares about Wall Street donors more than her public servants or citizens doesn’t deserve to be in the position to bring that attitude to the entire American economy.
As with the Kentucky Teachers’ Retirement System (TRS), Rhode Island’s pension fund got into trouble — not because of “overly generous benefits, but due to the failure of state and local government employers to pay their required share of pensions’ cost,” according to the Economic Policy Institute. As recently as November 2019, the Rhode Island pension situation was rated an “F.”
Raimondo became Rhode Island’s General Treasurer after years in the hedge-fund/private-equity industry, and she’s pretty cozy with Wall Street vultures. How cozy? The Koch-funded Manhattan Institute gave her a big award in 2011 for her work in privatizing the state’s pensions. She became governor after that, and continued policies that hurt public employees, retirees and taxpayers — but put money in her pocket—as Governor Raimondo was gifted shares in Point Judith Capital, which manages the pension for higher-than-usual fees. Of course. Rhode Island was stuck in this arrangement — one in which Raimondo’s venture-capital firm got $1.1 million for a paltry 5.11% return — from 2007 until right before Raimondo’s nomination. It was supposed to last only 10 years.
As in Kentucky, Rhode Island had not been making its payments to the pension plan in 2010. Raimondo, then still treasurer, didn’t ask to reverse a recent tax cut to Rhode Island’s wealthy. Instead, Rhode Island put new hires in a hybrid plan that combined defined-benefit plan (regular pension) with a 401(k) plan. Eventually, Raimondo became governor, enabling her to direct $1 billion of the state’s pension fund—14 percent—to hedge funds. That meant tens of millions in new fees to Wall Street billionaires. And there being no end to greed, a whopping 40 percent of the money was invested in high-cost, high-risk hedge funds and private-equity funds through the Cayman Islands so that the vultures wouldn’t have to pay U.S. taxes, according to Forbes.
Eventually, the U.S. Securities and Exchange Commission began investigating what turned out to be the $7.4 billion looting of the Employees’ Retirement System of Rhode Island, according to Ted Seidle, a Forbes columnist and Wall Street whistleblower who received more than $70 million in whistleblower fees from federal agencies. (Seidle is angry that the SEC has not done more in prosecuting in Rhode Island.)
The new plan actually cost Rhode Island more money than keeping the new hires in the pension plan while shortchanging retirees. But, most importantly, it made more money for Raimondo.
But not just from fees. Grateful Wall Street vultures funneled their campaign cash to Gina Raimondo. In particular, billionaire Enron commodities trader-turned-hedge-fund manager John Arnold was particularly generous to Raimondo. He even set up a PAC to specifically funnel money from himself and fellow fat cats to make her governor. Such fine company!
I’ll let Ted Seidle have the last word on Raimondo:
“Gina Raimondo, a venture capital manager with an uncertain investment track record of only a few years — a principal in a firm that had been hired by the state to manage a paltry $5 million in pension assets — had gotten herself elected as the General Treasurer of the State of Rhode Island with the financial backing of out-of-state hedge fund managers.
“The financial and strategic support Gina has received from Wall Street from the very beginning of her political career is noteworthy. Kudos to her for recognizing at the get-go that prolific backing from Wall Street could catapult her into politics, beginning with an elected position (General Treasurer) she was ill-equipped to handle.
“While her so-called “pension reform” involving shifting assets into [the] highest-cost, highest-risk investments ever devised by Wall Street cost state workers and taxpayers approximately $1 billion, Wall Street profited handsomely off the state pension.”
And THIS is the woman that our new president wants to put in charge of regulating Wall Street.
Chickens, meet the new fox “guarding” your hen house.
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