December 30, 2010
NYS Attorney General (and Governor-elect) Andrew Cuomo today announced a settlement with "Crime Czar" Steven Rattner. Rattner, who was the Obama administration's "Car Czar" - manager of the political bankruptcy of GM & Chrysler - has agreed to pay $10 million in restitution to New York State and will be barred from the pension business for 5 years. He had previously paid $6 million to settle related charges by the SEC.
It's just a coincidence that cities and towns across our state are getting the bill for our share of the NYS retirement fund. This year's big jump is causing many towns to face an increase in property taxes and cutbacks in services. How come? The state's pension system is generous - maybe too generous to some retirees. But at least as important is a problem that goes back to Rattner: the NYS pension system has one - just one - trustee. One person, our NYS Comptroller, to oversee $134 billion in assets. The most recent Comptroller to leave office pleaded guilty to a felony fraud charge. Not exactly a good check-and-balance system. And it is mismanagement combined with fraud that means you will pay more in taxes and get less in services from your town or village next year.
But back to Mr. Rattner. He will pay a total of $16 million and promise not to do any pension business for a while - and will not admit any guilt. This is not a win for Andrew Cuomo, who as Attorney General should have pushed harder for a settlement with bite: a $6 million fine will not bite much into a guy worth hundreds of millions. At least Eliot Spitzer got Wall Street to pay up when they transgressed.
Cuomo has promised to bring change to Albany. So far all he has brought is chump change.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).