Information posted by SEIU Local 1984. Excerpted and edited with permission
Public employees and employers contribute to the New Hampshire Retirement System; the NHRS invests those contributions and pays a defined benefit after retirement. Historically, NHRS investments quadrupled the value of contributions: of every dollar paid in benefits, about 75 cents was attributable to investment returns. But the NHRS Trust Fund lost 10% of its value during the burst of the tech stock bubble, and lost 18% of its value during the crash of the housing bubble, 2007-2009.
Nationwide, public pension funds lost staggering amounts of money to a variety of Wall Street schemes. Some states have taken legal action to recover losses:
• Ohio's Attorney General recently announced a $725 million settlement with AIG on behalf of retirement funds for state employees, teachers, police and fire fighters. The settlement resolves allegations of AIG's wide-ranging fraud from October 1999 to April 2005 involving anti-competitive market division, accounting violations and stock price manipulation.
• Alaska's Attorney General recovered $403 million from a consultant to the Alaska Public Employees' Retirement System to settle claims of malpractice, breach of contract and unfair trade practices.
• In May, Countrywide Financial and KPMG agreed to pay a total of $624 million to six New York public employee pension funds. The settlement resolved claims that the mortgage giant made misstatements about its lending practices, artificially inflating the price of its securities.
• In April, Michigan's Attorney General announced a $117 million settlement with the financial services firm UBS, to resolve allegations that UBS perpetrated a financial fraud against investors, including the Michigan Pension Fund, by misrepresenting HealthSouth's financial condition.
Wall Street Reform will help protect retirement security for public workers across America.
In the past few years, new accounting standards focused media attention on unfunded long-term liabilities - at the same time that public pension funds were losing a trillion dollars in value, largely due to Wall Street greed.
Anti-government pundits used the situation to attack public sector pensions and call for pension "reform". Lost in all the rhetoric was one basic fact: the trillion dollars in unfunded public pension obligations which pundits now find so alarming were mostly the same trillion dollars of public pension funds lost to Wall Street abuses.
It will take decades for public pension funds - including the NH Retirement System - to recover from the effects of the 2008 financial meltdown. We want to make sure it doesn't ever happen again.
On June 30, 2007, before the Wall Street meltdown, the NH Retirement System had $5.9 billion in investments, including
Two years later, NHRS had restructured its investments to minimize losses, after
In those two years, the stock market had lost 37% of its value while in comparison NHRS lost 25% of its investments' value. With the restructuring and other prudent measures, the fund is now on the way back, with strong gains of 13.7% in 2010. However, much of the money that was lost when Wall Street crashed still has to be made up somewhere. For NHRS, this "asset loss" was "the primary driver" in this year's increase in employers' contribution rates.
So, keep following the money: increased employers' contribution rates puts strain on municipal budgets, causing most cities and towns to raise property taxes. The money NHRS lost in the Wall Street meltdown will come out of state and municipal budgets for a long time to come. After sparking the Wall Street meltdown that cost the NHRS (and New Hampshire residents) $2.5 billion, the top 25 hedge fund managers earned a collective $25.3 billion in 2009.
That's why Wall Street Reform matters to us. Wall Street's irresponsible games hurt our pension fund and hurt our State's economy.
Wall Street spent millions lobbying against this bill. According to the most recent lobbying disclosures, Goldman Sachs spent $1.6 million, Wells Fargo spent $1.3 million, Bank of America spent $1.1 million, the US Chamber of Commerce spent $9.5 million, the Financial Services Roundtable spent $1.6 million in lobbying fees just in the three months ending June 30, 2010. Remember, this is the same industry that needed the $700 billion bailout through the Troubled Asset Relief Program (TARP) less than two years ago.
Wall Street's reckless actions crashed the economy - and then they fought against reform, and delayed this bill with the help of a filibuster by many Senate Republicans. A majority of Congress - including our Senator Jeanne Shaheen, and Representatives Carol Shea-Porter and Paul Hodes - stood up for the working families and approved the Wall Street Reform bill.
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