San Diego to weigh tentative SEC offer

City officials used the erroneous documents – which were reviewed by the City Council – to secure more than $2 billion in bonds from 1996 to 2003, but there has been no indication that the city could fail to repay investors.

County system invested in Amaranth hedge fund

The county pension fund invested $175 million with Amaranth one year ago.

Amaranth officials informed them Tuesday that only $70 million of the county's investment in the hedge fund is left in the account. “They're saying that's the amount of money we can expect back,” said Brian White, CEO of the San Diego County Employees Retirement Association.

“It's a soft number. It could be more or less than that,” White said. “We still have to see how they do selling off their assets.”

[. . .]

The retirement association board will meet at 8:30 a.m. today in the third-floor conference room of the National Bank building in downtown San Diego, 401 W. A St.

The Amaranth investment is not on the agenda, though one board member has asked that it be added. To discuss it, the board would have to vote at the meeting to alter the agenda.

A public workshop regarding the situation with Amaranth, and the pension system's investments in hedge funds in general, has been scheduled for Oct. 19.

The "soft number" term is an understatement, given the nature of investment risk.

Back to the city article (rather than county):

The City Council for now can only deal with the SEC.

Members will hold a special meeting at 8 a.m. today to be briefed on the talks. Though City Attorney Michael Aguirre refused to confirm that there is a settlement on the table, Councilman Tony Young said Monday that Aguirre told him SEC staff sent the city a formal tentative agreement over the weekend.

Sanders and Aguirre have sought to keep as much of the SEC negotiations under wraps as possible, citing the sensitive nature of the talks and the agency's strict desire for confidentiality. Much of today's meeting will take place behind closed doors.

Why on earth have two separate articles when we all know that the two issues are hopelessly interlocked. The SEC's desire for secrecy here has every shade of secrecy of the Resolution Trust Corporation conducting overnight transfers of ownership from a given Savings and Loan Institution that is declared "unsound" to a bigger banking institution like Bank of America, where the RTC also guarantees the value of the assets (mortgage notes and such) to the purchasing buyer.

Then this bit of wisdom:

Experts with knowledge of how the SEC pursues its inquiries said requirements in the agency's orders for San Diego depend on how much of an example commissioners want to make of the city.

But does that mean that they MUST BORROW MORE MONEY TO THROW AT WALL STREET rather than like a futures trader that is over his head yelling to his broker to "GET ME OUT."

Where Oh Where have all those deposit brokers (from the S&L bailout days) and their clients gone? They have gone on to greener pastures -- where the lure of profits by know-nothing elected public servants seems to be a much more lucrative game. They can impose taxes on homeowners even after the prices of the homes that are held as collateral drop back to earth. It offers better security to the lender than an old fashioned mortgage to an S&L.

Now here is an SEC bargain that the local folks can't refuse -- ISSUE MORE BONDS TO BE REPAID (with loan shark interest) BY YOUR LOCAL FOLKS OR WE WILL THROW YOU IN THE SLAMMER.

Watch and see.

In Oregon we have a former head of the City of Portland "OFFICE OF MANAGEMENT AND FINANCE: Bureau of Financial Services," Mark Gardiner, now sitting in a seat at the Oregon Investment Council.

About the only one publicly appearing to express candor on the OIC is Bill Parish. See his Brainstorm Northwest article "The Amazing "Carry" and Tax Loophole Inside PERS" including this bit of reality:

Although innovative, now is a good time for both PERS participants and taxpayer advocates alike to "connect the dots" and understand the significance of the "carry" and this amazing tax loophole because although they put a smile on Wall Street, they are having a disastrous impact on Main Street as good companies along with their quality jobs and related tax payments that support vital government services, most notably PERS itself, fall prey to hostile takeovers by such private equity firms, financed by the OIC, who load them up with debt and compromise their long term future.

There are yet more dots to connect.

Our City of Portland Auditor, Gary Blackmer, commits only a couple sentences in the annual audit to the issue of investment risk related to the pension fund and the investment risk of the proceeds of the City of Portland Pension Obligation Bonds by referencing (deferring to) -- guess who -- "OFFICE OF MANAGEMENT AND FINANCE" as believing that investments are wise.

UPDATE: Searching For News (No News To Find) But:

From: "A Canadian Econoview" comes "So is This a Public-Private Partnership?" closing with:

Presumably if the public sector employees whose retirement funds are invested by OMERS object to owning (even at one remove) a for-profit firm in the health care field, they could demand that OMERS instruct MDS labs to cut the fees it charges for its services, raise its employees' pay, and under no circumstances make any profit which might be paid into to the municipal employees' pension pool. Socialism is, after all, the ownership of the means of production by labour.

He Gets It.

UPDATE: Still More:

From the National Center for Policy Analysis
PUBLIC PENSION PRICE TAG (August 21, 2006)

Like a broken record "In determining a system's necessary funding levels"

That is THE ANSWER to THE PROBLEM:

Because their size and complexity offer such a wide field for abuse, state and local retirement systems pose a significant moral hazard -- threatening the long-term fiscal stability of many of their sponsors, says E.J. McMahon, senior fellow at the Manhattan Institute.

Shuffle all the money to the Wall Street.

The problem is THEIR LINK TO WALL STREET just as it was with 1920's banks.

UPDATE Friday Oct 6: Here is a curious interplay between federal spending for health care and how that money gets redirected directly into stocks.

Hospital disagrees that mistake made on wage costs October 6, 2006

The University of California San Diego Medical Center over-reported its 2004 wage costs to Medicare by nearly $48 million, a mistake that if not corrected would cause the federal agency to overpay 18 southern California hospitals for services in 2007, according to a new report.
[. . .]
At the center of the inspector general's dispute with UCSD is the hospital's cost for funding its pension fund for retirees.

Using widely accepted, forward-looking accounting methods – generally accepted accounting principles or GAAP – the hospital projected that its pension fund costs in 2004 should have totaled $47.8 million.

The inspector general, however, found that no payments were made by the hospital to pension funds in 2004 because those accounts were fully funded and did not require additional deposits.

The best way to view this puzzle piece is that it is easier to deal with a whole lot of smaller pension amounts individually than to instead deal with a big big payout for failed banking as with the Savings and Loan bailout and the temporary use of the Resolution Trust Corporation. Retirement savings are just savings with a penalty for early withdrawal. Pension trustee's are just loan officers from banks. Same thing. Yet, is the Hospital here looked at as a BANK? Is the hospital's pension trustee looked at as a BANK? Are depositors, en mass, allowed to withdraw their life savings from their bank, their pension fund?

UPDATE Oct 7 Link to "Problems & Issues: Hedge Fund Headline Roundup" (via "Hedge Fund Suckitude Round-Up")