“The risky investments are actually the opaque hedge funds and derivative instruments … in terms of being a hedge, nonsense.” One telling exchange pointed up the contrast between the two candidates. “He’s chasing risk and he doesn’t know what he’s doing,” Trichter said at the debate. Moreover, as Trichter pointed out at the debate, investments in private markets are opaque and often hard to evaluate and liquidate. “That represents $7.8 billion” lost, he notes, in addition to the fees.Īlternative investments do not consistently offer a high return commensurate with their high fees nor do such funds consistently offer a “hedge” against market downturns. Rather, Trichter notes, the nearly $35 billion in alternative investments, including nearly $8 billion in hedge funds, have underperformed, earning just 5.4 percent annually over DiNapoli’s tenure, “while a passive investment in the S&P 500” would have earned 7.46 percent. Calling DiNapoli the “$6 billion man,” Trichter notes that the comptroller has paid that amount, over his tenure, to hedge funds, private-equity funds, and other “alternative funds,” including $818 million in 2017-and not for the stellar performance that such high-end investments are supposed to provide. Specifically, he thinks that New York is paying excessively high fees to financial managers for weak returns. He has been applying that skepticism to DiNapoli’s stewardship of the public-pension fund. As he said at the debate, “I’ve helped restructure some of the most troubled pension funds in the country,” including Jacksonville, Florida’s, once-insolvent fund.Īs a financier, Trichter, importantly, is not intimidated by other financiers, and has a healthy skepticism of them. He’s done major underwriting and restructuring work. Trichter, a self-described “lifelong Democrat” who switched parties to run for this office, has spent a career in high finance. Trichter, DiNapoli’s challenger, is different. DiNapoli is intelligent and competent, but necessarily depends on financial professionals for advice-and they are not always on the side of their client, the state. Before taking over as comptroller 11 years ago, he was in the state assembly his last private-sector job was more than three decades ago, as a telecommunications manager. DiNapoli, a genial man who seems to have served the state with integrity, is a good example. The fund is seeded by contributions by state and local government, as well as by workers taxpayers, not retirees, must make up any shortfalls in investment decisions.ĭespite the financial complexities of this job, and the fact that New York is home to Wall Street, no comptroller in living memory has had a background in finance.
ANDREW PECUNIA NEW YORK HOW TO
The comptroller, advised by staffers and outside professionals, decides exactly how to invest the fund’s $207 billion so that it can pay out nearly $12 billion in benefits each year. The system’s pension fund is responsible for guaranteed payments to 1.1 million people, comprised of 652,000 active state and local workers and 471,000 retirees.
The officeholder’s most important job, however, is to serve as sole trustee of the New York State and Local Retirement System. The state comptroller has many tasks, from auditing government agencies to serving as New York’s accountant. It’s a shame, because the state comptroller is one of the most important elected officials in the state, and Trichter has some fresh ideas about how to manage the public’s money.
This year’s race, between Tom DiNapoli, Hevesi’s successor and the two-term incumbent, and Jonathan Trichter, has garnered scant public interest, and the single hour-long debate held between the candidates last week on NY1 did little to change that fact.
The last time it made front-page news was 2006, when Alan Hevesi resigned the post and went to prison for public corruption. The office of New York State comptroller is hardly exciting.
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