Rich DeColibus: It's not rocket science - why doesn't STRS get it?
From Rich DeColibus, September 17, 2009
Subject: PBI
Dear Board Members,
I see the gorgon of PBI has again raised it's ugly head. You know, given almost the entire civilized world is disgusted and appalled by the undeserved, massive bloated bonuses the financial world regularly attempts to justify for performances which can only be characterized as mediocre at best, it really is inexplicable to ordinary people like me that this ludicrous vestige of ancient thinking still exists. Are you really in favor of the multi-million dollar bonuses AIG executives got after we taxpayers shelled out $50 billion to bail them, and their company, out of impending bankruptcy created totally by their own greed and incompetence? Naturally, their response was lavish and extravagant "conferences" at exotic and expensive resorts that we funded. Who could deserve a little fun more, the poor fellows? Do you somehow believe we STRS members think your PBI bonuses are in any way different or more acceptable? If you do, please adjust your belief; they are a fiscal atrocity, given the recent history of STRS's investments. You can bob and weave until doomsday, but you will never convince any sane STRS member you have any justification for this; child molesters have extensive explanations for why "It isn't their fault" they do what they do, and we STRS members are tired of the same old "It isn't their fault," so we continue to pay out millions for bonuses that have absolutely no rational explanation in the real world.
As far as I can tell, the only effect these fiscal lesions have is to encourage your investment counselors to take riskier actions on the basis of "If it goes bad, oh well, no skin off my nose, but if it succeeds it'll pad my bonus nicely, woohoo." It violates every notion of common sense to operate any financial investment organization this way. Why doesn't STRS "Get it?" C'mon, this is not rocket science. Your only responsibility is preservation of capital; it is clearly not being an employment house for financial advisers. The facts are crystal clear. Had STRS invested primarily in T-bills for the last twenty years, STRS would have $85 billion in assets today. Yes, you can do much better than bonds in the short term with riskier investments, but the downturns you don't see coming will always cost more than the higher profits you get when things are good, which is exactly what happened the last two years. Your investment counselors get multi-hundred thousand dollar salaries to see the market future, and the reality is they didn't see the future well enough to merit being rehired, much less deserving bonuses. Those are facts, and my expectation is STRS Board members will respond to facts, not mushy feel-good rationalizations. Maybe my expectation is excessively mean-spirited, but it is my expectation nonetheless, because it is my money being squandered.
Rich DeColibus
[Rich was president of the Cleveland Teachers Union for 16 years, now retired]
Subject: PBI
Dear Board Members,
I see the gorgon of PBI has again raised it's ugly head. You know, given almost the entire civilized world is disgusted and appalled by the undeserved, massive bloated bonuses the financial world regularly attempts to justify for performances which can only be characterized as mediocre at best, it really is inexplicable to ordinary people like me that this ludicrous vestige of ancient thinking still exists. Are you really in favor of the multi-million dollar bonuses AIG executives got after we taxpayers shelled out $50 billion to bail them, and their company, out of impending bankruptcy created totally by their own greed and incompetence? Naturally, their response was lavish and extravagant "conferences" at exotic and expensive resorts that we funded. Who could deserve a little fun more, the poor fellows? Do you somehow believe we STRS members think your PBI bonuses are in any way different or more acceptable? If you do, please adjust your belief; they are a fiscal atrocity, given the recent history of STRS's investments. You can bob and weave until doomsday, but you will never convince any sane STRS member you have any justification for this; child molesters have extensive explanations for why "It isn't their fault" they do what they do, and we STRS members are tired of the same old "It isn't their fault," so we continue to pay out millions for bonuses that have absolutely no rational explanation in the real world.
As far as I can tell, the only effect these fiscal lesions have is to encourage your investment counselors to take riskier actions on the basis of "If it goes bad, oh well, no skin off my nose, but if it succeeds it'll pad my bonus nicely, woohoo." It violates every notion of common sense to operate any financial investment organization this way. Why doesn't STRS "Get it?" C'mon, this is not rocket science. Your only responsibility is preservation of capital; it is clearly not being an employment house for financial advisers. The facts are crystal clear. Had STRS invested primarily in T-bills for the last twenty years, STRS would have $85 billion in assets today. Yes, you can do much better than bonds in the short term with riskier investments, but the downturns you don't see coming will always cost more than the higher profits you get when things are good, which is exactly what happened the last two years. Your investment counselors get multi-hundred thousand dollar salaries to see the market future, and the reality is they didn't see the future well enough to merit being rehired, much less deserving bonuses. Those are facts, and my expectation is STRS Board members will respond to facts, not mushy feel-good rationalizations. Maybe my expectation is excessively mean-spirited, but it is my expectation nonetheless, because it is my money being squandered.
Rich DeColibus
[Rich was president of the Cleveland Teachers Union for 16 years, now retired]
posted by Kathie Bracy at 4:07 PM
<< Home