Tag: tom wolf
Cities And States Paying Massive Secret Fees To Wall Street

Cities And States Paying Massive Secret Fees To Wall Street

California’s report said $440 million. New Jersey’s said $600 million. In Pennsylvania, the tally is $700 million. Those Wall Street fees paid by public workers’ pension systems have kicked off an intensifying debate over whether such expenses are necessary. Now, a report from an industry-friendly source says those huge levies represent only a fraction of the true amounts being raked in by Wall Street firms from state and local governments.

“Less than one-half of the very substantial [private equity] costs incurred by U.S. pension funds are currently being disclosed,” says the report from CEM, whose website says the financial analysis firm “serve(s) over 350 blue-chip corporate and government clients worldwide.”

Currently, about 9 percent — or $270 billion — of America’s $3 trillion public pension fund assets are invested in private equity firms. With the financial industry’s standard 2 percent management fee, that quarter-trillion dollars generates roughly $5.4 billion in annual management fees for the private equity industry — and that’s not including additional “performance” fees paid on investment returns. If CEM’s calculations are applied uniformly, it could mean taxpayers and retirees may actually be paying double — more than $10 billion a year.

Public officials are overseeing this massive payout to Wall Street at the very moment many of those same officials are demanding big cuts to retirees’ promised pension benefits.

“With billions of public worker and taxpayer dollars put at risk in the highest-cost, most opaque investment schemes ever devised by Wall Street for a decade now, investigations that hold Wall Street profiteers accountable are long, long overdue,” said former Securities and Exchange Commission attorney Ted Siedle.

Private equity firms have argued that their fees are worth the expense, because they supposedly deliver returns for investors that beat low-fee index funds, which track the broader stock market. But those private equity returns are typically self-reported by the firms over the life of those longer-term investments, meaning there are few ways to verify whether the returns are real. Indeed, a recent study from George Washington University argued that private equity firms are using their self-reporting authority to mislead investors into believing their returns are smoother and more consistent than they actually are.

In a 2014 speech, the SEC’s top examiner, Andrew Bowden, sounded the alarm about undisclosed fees in the private equity industry, saying the agency had discovered “violations of law or material weaknesses in controls over 50 percent of the time” at firms it had evaluated.

To date, however, the SEC has taken few actions to crack down on the practices, but some states are starting to step up their oversight.

In New Jersey, for instance, pension trustees announced a formal investigation of Gov. Chris Christie’s administration after evidence surfaced suggesting that the Republican administration has not been disclosing all state pension fees paid to financial firms.

In Rhode Island, the new state treasurer, Seth Magaziner, a Democrat, recently published a review of all the fees that state’s beleaguered pension fund has paid. The analysis revealed that the former financial firm of Democratic governor Gina Raimondo is charging the state’s pension fund the highest fee rate of any firm in its asset class.

In Pennsylvania, the new Democratic governor, Tom Wolf used his first budget address to call for the state “to stop excessive fees to Wall Street managers.”

These moves are shining a spotlight on one of the most lucrative yet little-noticed Wall Street schemes. With so much money at issue – and with pensioners retirement income on the line — that scrutiny is long overdue.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising, and Back to Our Future. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

AFP Photo / Stan Honda 

Pennsylvania Governor Orders Moratorium On Executions

Pennsylvania Governor Orders Moratorium On Executions

By Angela Couloumbis, The Philadelphia Inquirer (TNS)

HARRISBURG, Pa. – Pennsylvania Governor Tom Wolf on Friday announced a moratorium on executions in Pennsylvania, saying he wanted to wait for the results of further study on its value.

“This reprieve is in no way an expression of sympathy for the guilty on death row, all of whom have been convicted of committing heinous crimes, and all of whom must be held to account,” the governor said in a memo issuing a reprieve for Terrance Williams, a Philadelphia man on death row for a 1984 murder. “The guilty deserve no compassion, and receive none from me. I have nothing but the deepest appreciation for the work of victim advocates, and sympathize and stand with all those who have suffered at the hands of those in our society who turn to violence.”

Williams was convicted and sentenced to death in 1986. His appeals have bounced back and forth for years. In January, Governor Tom Corbett signed his death warrant, and a March execution date was scheduled.

“There has been no contention that he is innocent of the crime of which he was convicted,” Wolf wrote in his memorandum. “The reprieve announced today does not question Williams’ guilt. Rather, I take this action because the capital punishment system has significant and widely recognized defects.”

Corbett signed 40 death warrants, although no executions occurred during his time in office.

Pennsylvania’s last execution was in 1999.

There are just over 180 people on death row in the state.

Wolf said during his campaign last year that he would not sign death warrants until concerns have been addressed about avoiding executing an innocent person.

Last fall, Corbett stayed the execution of Hubert L. Michael Jr., who confessed to murdering a York Couny teenager two decades ago. Corbett’s decision came after state officials were unable to acquire lethal injection drugs.

The drugs needed for lethal injections are becoming harder for states to obtain because some manufacturers have refused to sell them for that purpose. Some states, including Pennsylvania, have resorted to obtaining them from compounding pharmacies.

Photo: Governor Tom Wolf via Flickr

Democratic Challenger Wolf Topples Pennsylvania Gov. Corbett

Democratic Challenger Wolf Topples Pennsylvania Gov. Corbett

By Thomas Fitzgerald, The Philadelphia Inquirer (MCT)

PHILADELPHIA — Democrat Tom Wolf, a businessman from central Pennsylvania, was elected governor Tuesday in his first campaign for political office.

Republican Tom Corbett became the first incumbent governor to lose re-election in the state’s modern history.

“We need to re-establish education as the priority,” Wolf said, speaking to supporters at the York Expo Center shortly after 10 p.m., after thanking Corbett for his service.

He exhorted Pennsylvanians to believe in themselves and their future. “Let’s make this the time,” Wolf said. “Let’s get started.”

A misty-eyed Corbett addressed a crowd of about 200 supporters shortly before 10 p.m. at the William Penn Hotel in Pittsburgh.

“They said I might be a one-term governor and I am,” Corbett said. “But I am proud of what we did.”

He said he had fought for fiscal discipline and limited government, while making tough choices along the way.

Exit polls showed Corbett losing across the board — among men, women, all age groups except those over 65, and all income levels. He also was losing in every region of the state but central Pennsylvania.

When he takes office in January, Wolf will likely face a Republican-controlled legislature and a budget deficit as he tries to make good on a promise to dramatically increase the state government’s share of public school costs.

Running on the promise of a “fresh start,” Wolf poured $10 million of his own money into his campaign for the Democratic nomination, swamping better-known rivals.

He hammered Corbett for cuts to state education spending early in his administration, while passing out business tax cuts and refusing to tax the value of natural gas extracted from the Marcellus Shale formation that underlies much of the state. In addition, Wolf argued, jobs growth was anemic compared to the rest of the nation — putting the lie to supply-side economic theory, he said.

Exit polls suggested the Democrat scored on the jobs issue: 90 percent of voters interviewed said they remain worried about the economy, and Wolf led among those voters.

All told, candidates and independent interest groups spent at least $70 million on the campaign in 2014. That included $47.4 million tallied by the Center for Public Integrity, for about 50,000 television ads on broadcast and national cable channels in Pennsylvania.

Wolf, 65, ran his family’s York County building-supplies company for nearly three decades, building into the nation’s largest supplier of kitchen cabinets while sharing profits with workers. He also served for 18 months as state revenue secretary in the administration of former Gov. Ed Rendell.

Wolf has a doctorate in political science from the Massachusetts Institute of Technology and served in the Peace Corps in India as a young man.

Corbett, 65, was state attorney general for two terms before winning election by 9 percentage points in 2010, a Republican wave year. As attorney general he sent a series of state lawmakers and top aides to prison on corruption charges.

Wolf’s running mate for lieutenant governor, Democratic state Sen. Mike Stack of Philadelphia, appearing at the Sheet Metal Workers hall in South Philadelphia, said in an interview after the polls closed “We need to invest in public education or we are doomed.”

After casting his own ballot Tuesday afternoon, Wolf said he was heading home for dinner with family.

“We’re having chili,” he said.

The Democratic candidate — with a horde of reporters, cameramen and staffers in his wake — swept in and out of his Mount Wolf polling place in about a minute.

Before Corbett, the last Pennsylvania governor to lose re-election was William Bigler in 1845, after two years in office. A Democrat, he ran afoul of abolitionist sentiment after supporting the Kansas-Nebraska act, which ended the Missouri Compromise and allowed slavery in new western territories.

After a constitutional convention in 1874, Pennsylvania governors’ terms were lengthened to four years, but they were no longer allowed to succeed themselves.

Beginning with a new state constitution in 1968, governors were allowed to have two, four-year terms. Corbett is the first incumbent under those modern rules to have lost.

Photo: Tom Wolf via Flickr

When Government Was Good

When Government Was Good

THORNDALE, PA — Tom Wolf’s mood is sunny but his words are serious.

He’s answering teachers’ questions at an elementary school featured last year in a New York Times story about the costs of overcrowding and underinvestment. The Democratic nominee for governor, Wolf criticizes Pennsylvania incumbent Tom Corbett for education cuts, but he is not terribly partisan about it. Wolf is a businessman who also holds a Ph.D. in political science, and he offers a brief commentary on the importance of “public goods,” not a term typically invoked on the stump.

He ends a lengthy response about pensions with an apology. “Am I giving you more information than you want here?” he asks with a smile.

Wolf has reason to be in fine spirits. Democrats are unlikely to have a great evening on Nov. 4, but as the returns roll in, the 65-year-old native of York, PA, is almost certain to emerge as one of his party’s stars. Wolf is so far ahead, wrote The Associated Press‘ Marc Levy, that the state’s pollsters couldn’t find an example of a candidate who “overcame the kind of polling deficit Corbett now faces.”

Democrats may find solace in other governors’ races as well, but Wolf will stand out as an unusual politician who speaks to two of the main sources of popular discontent: unhappiness with the economic system over its failure to deliver for so many workers, and widespread alienation from government.

As a businessman who took over and at one point saved his family’s building materials company, Wolf thinks capitalism works best when employees have a stake in their firm’s success.

“I share 20 to 30 percent of my net profit with my employees,” Wolf says. “Everybody is a stockholder in the company. My Republican father came up with the idea. And he did it because it really works.

“I am judged in my company by my truck drivers, not by me. They see my customers more than I do. I know that my warehouse people who pack the trucks get credit because they pack the trucks so well.” Thinking of workers as stakeholders is old-fashioned. But these days, it’s also revolutionary.

Then there is his talk of “public goods.” Wolf recalls picking up a group of exchange students from France who visited his family in 1965, a time when America’s public works were the best in the world. Kennedy Airport, the Verrazano-Narrows Bridge, the New Jersey Turnpike, the nation’s water systems, the new schools in his hometown — all, he says, were state of the art.

Since then we have fallen far behind other nations in productive infrastructure investment. “You can get away with deferred maintenance in any setting for so long, but then things don’t work,” Wolf notes during an interview in the school’s library where a water-damaged wall underscores his message. “This stuff really does catch up to you. You don’t get jobs. You don’t have people who can buy things. You let your schools get hollowed out. That’s not good for anybody.

“Yes, the market is going to deliver the goods,” he concludes, “but what does the government need to do to make sure the market is operating optimally?”

Yet progressives, Wolf argues, have to confront uncomfortable facts, too: “People are afraid of taxes because they don’t see that they get much for their taxes. … Governments in the United States have to show — and I think it’s a bipartisan finger-pointing exercise here — that we can actually deliver to people who pay taxes.”

He speaks of his time as secretary of revenue under then-Gov. Ed Rendell when he visited with his agency’s employees to persuade them to look at the state’s taxpayers as “our customers,” as “the ones that give you employment.”

“What we need is to get out of this sort of thing that government is this immutable institution that just sits there and is a pain in the butt at best. … The case must be made again that government is something that actually plays a constructive role in the lives of people.”

Then the hard part: “But to do that, you can’t just say it. You’ve got to actually act it out.”

True, Wolf is setting himself high standards. But in an era of deadlock and estrangement from public institutions, it’s bracing just to hear someone insist that they can be made to work again.

E.J. Dionne’s email address is ejdionne@washpost.com. Twitter: @EJDionne.

Photo: Tom Wolf via Flickr

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