By David in Friday Harbor
I’ve been flattered by our host with a request to share a few thoughts about why Naked Capitalism and the Naked Capitalism Commentariat have been significant in my social and political life for well over a decade and a half. Hopefully it will encourage other readers to shake-off their armor of cynicism and to reach into your wallet and contribute via the Tip Jar. I have contributed many times to support this irreplaceable resource.
As some probably already recognize, I spent 32 years in government service making contributions to CalPERS, the pension fund administered by the State of California, before retiring at the close of 2016. I’m now a beneficiary of the very generous pension that I and my employer, a contracting local agency, funded through payroll deductions every other Friday for those 32 years.
At a stated value of $556.2 billion dollars, CalPERS is one of the largest and most impactful public trust funds in the world. Its enormity also makes CalPERS a fat target for every financial grifter and political racketeer in the land.
Regular readers will know that the CalPERS pension system has not been without controversy over the years, and Naked Capitalism and the Commentariat have been at the forefront of holding feet to the fire. The relentless reporting of Yves Smith at Naked Capitalism and the relationships formed by the Commentariat and Naked Capitalism meet-ups have had — against all odds — a significant impact on the direction of CalPERS.
Long-standing readers may recall the sordid history of CalPERS since the appointment of California Governor Gavin Newsom’s mentor, former State Assembly Speaker and San Francisco Mayor Willie Brown, to the CalPERS Board of Administration. Former CEO Fred Buenrostro was forced to resign in 2008 and was eventually indicted by the Feds in 2011 for defrauding the fund. As part of his plea deal in 2015, Buenrostro implicated a former Board member, Al Villalobos, who acted as a placement agent for Apollo Global Investments, the alter-ego of Leon Black, one of Jeffrey Epstein’s largest funders. Tragically this former Board member chose to blow his brains out rather than spill the beans on the money trail leading from the shoeboxes of cash he was funneling to Buenrostro. Buenrostro was ultimately sentenced to a prison term that exceeded the recommendation of the Department of Justice.
These circumstances suggested that there was something rotten in the private investment edifice into which the retirement savings of public employees and the taxpayers were being funneled. Rather than engage in sober reflection, public officials and the CalPERS Board embarked on a cover-up, accompanied by over a decade and a half of appointing unqualified and downright incompetent executives who evinced little understanding of the subtleties of investing in private markets. Readers of this website will recall the parade of provincial hayseeds placed in the top positions of a fund that had once been one of the best-managed in the world.
The eventually imprisoned CEO was first replaced by Anne Stausboll, a legal writing instructor from a third-tier law school in California’s Central Valley. She unexpectedly resigned after Buenrostro’s sentencing became final in 2016, to be replaced by the current Marcie Frost. This website revealed that Frost, represented as pursuing a dual bachelor’s and master’s degrees in public administration, was in fact a high school-educated clerk-typist who had never been admitted to a college degree program. The General Counsel Matt Jacobs was a white-collar criminal defense attorney with zero credentials in investments.
The CalPERS Board appointed a CIO, Ted Eliopoulos, whose only qualification was a stint as an in-house attorney in the Real Property office. CalPERS also hired a grossly underqualified CFO was exposed through the work of this website as a fraud and was “removed” before his probation was over. When Eliopoulo eventually left after years of stonewalling questions about controversial investments, the next two CIOs had short tenures after their corruption was exposed on this website. Eventually “Everything is like CalPERS” became a meme here at Naked Capitalism for the neoliberal dismantlement of competent government everywhere.
This all sounds pretty bad — but the constant barrage of exposés by Naked Capitalism appears to finally be paying dividends for California workers and retirees.
This past year a highly-qualified Chief Investment Officer with 40 years of experience was brought in. The General Counsel has likewise been replaced by an impressive outsider who policed private investing at the SEC. These appointments are an enormous turn-around by CalPERS. In my view it is quite unlikely that these highly qualified individuals would have been appointed if not for the dogged reporting on CalPERS by Naked Capitalism.
Not to put too fine a point on it, but Naked Capitalism matters, and in this example, not just to CalPERS beneficiaries, but also to the California taxpayers who backstop the giant fund.
Justice Brandeis was correct about sunshine being the best disinfectant and electric light the best policeman. While sometimes it feels like all of us are shouting impotently into the maelstrom, we must keep shouting. Every once in a while the wind calms down enough that our voices can be heard, however briefly, and a few stakes can be re-set into the ground before the entire tent blows away.
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