What would you say if I told you that in the state’s current fiscal climate Assemblyman Albert Torrico (D-Newark) is carrying a bill, AB 1967 (see link to .pdf below) that if passed, would cost our state retirement funds (both Cal-STRS and Cal-PERS) billions of dollars?
AB 1967, in essence, puts some pretty huge prohibitions on where the billions of dollars in these retirement funds can be invested. Of course, right now, these funds are invested (presumably) to maximize rate of return. But under Torrico’s bill, these public funds who have to immediately and forever divest from any investments with what are called Sovereign Wealth Funds, which to put it simply are those funds that are affiliated with foreign countries. Torrico’s bill does exempt any SWF’s affiliated with a country (or countries) that have signed onto a bevy of various international human rights accords. Oh yeah, the United States, were it considered a foreign country under Torrico’s bill, would not meet the criteria as we have not ratified all of these accords…
There are some instances when it is sound public policy to restrict investment options for publicly held pension funds. A great example would be last year when Governor Schwarzenegger appropriately signed into law Assemblyman Joel Anderson’s California Public Divest From Iran Act.
It is well known that the political leaders of Iran have been aiding and abetting known terrorists — that is not the kind of place we want funds being invested and, frankly, everyone in America (government or private citizen) should be joining in voluntary economic sanctions against that country.
But it’s a little far-fetched and xenophobic to say that the pension funds of California retirees (and future retirees) cannot participate in any funds that have as participants money from other sovereign nations (oh, except those sovereigns that meet some sort of intricate criteria that the United States itself does not meet).
I wonder if Assemblyman Torrico would take an amendment to his bill to simply prohibit investments by these funds with sovereign nations that are aiding and abetting terrorists? I don’t think that would solve his real agenda, which is apparently something like this…
The SEIU uber-union is driving this legislation… Why? Apparently their target is one specific fund, the Carlyle Group, that bought up a large nursing home outfit called Manor Care. SEIU has been trying to unionize them, and apparently Carlyle has been none too supportive (I have these visions of union members picketing a nursing home). Supporting the generally accepted theory that most Democrats in the legislature are stooges for the unions, everything that I have heard is that this is the real reason why Torrico is carrying this bill.
I don’t often agree with the Sacramento Bee’s editorials, but in this case they penned one in opposition to Torrico’s bill that was pretty good.
Republicans and Democrats should unite in opposition to this bill. With the massive budget shortfall facing California, the LAST thing we need to be doing is passing politically motivated legislation which will serve only to make it more difficult for our already under-funded pension pools to maximize performance.
Oh, If you are wondering who might be on the hook if they don’t have enough money in those funds? Yeah, get a mirror…
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