Don Roach: Can We Believe Raimondo?

Wednesday, October 23, 2013


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That’s the question I was asking myself last week with all of the brouhaha surrounding Treasurer Raimondo’s handling of our pension reform. Can we believe what Raimondo is telling us or are we to believe that our pension gives large hedge funds a “license to steal” as the AFSCME (a little union whose constituency has been effected by pension reform if you didn’t know) reported last week?

This is definitely not a trivial question nor are the charges claimed within the AFSCME’s ‘treatise’ to be taken lightly. Here are a few nuggets from the report:

There has been a sinister pall of secrecy regarding fundamental investment information related to the ERSRI (such as the level of investment advisory, performance and other fees paid for money management, the risks related to hedge, private equity and venture capital strategies and investments, and conflicts of interest) orchestrated by state officials and aided by key investment services providers, punctuated by periodic self-serving misrepresentations regarding such investment matters to the general public.

Most disturbing, from a regulatory and public policy perspective, is that the General Treasurer’s practice of withholding information and intentionally providing incomplete disclosures regarding ERSRI’s investments results in: (1) misleading the public as to fundamental investment matters, such as the true costs and risks related to investing in hedge, private equity, and venture capital funds; (2) understating the investment expenses and risks related to ERSRI; and (3) misrepresenting the financial condition of the state of Rhode Island to investors.

In other words, the union is upset about the alleged lack of transparency around how the state’s money is being invested, and believe that Raimondo’s administration is pulling a fast one over the rest of us.

Raimondo responded to these criticisms via an e-mail which partly stated:

It’s important to remember:

  • I fought to keep a defined benefit pension and always respected collective bargaining
  • There were countless hours of pension advisory group meetings, legislative hearings and town hall-style meetings with the governor and me
  • The Democratic legislature overwhelmingly passed pension reform and Governor Chafee signed it
  • An independent audit found the state pension numbers to be reasonable and reliable
  • Because of efforts we've made in my term, Rhode Island’s pension investment portfolio is among the most transparent in the country


Emphasis mine. At the end of the e-mail was a link that allowed you to contribute to Raimondo’s war chest... err... campaign fund account. Really?

So do we believe the union, whose interest definitely lies with its constituents and making sure they get the most out of their pensions. Or do we believe a politician who responds to the charges against her by ending her e-mail asking us for more money?

Um, is there a third option?

When Democrats implode

From time to time we see Republicans implode. The gun raffle is a recent example of this. When that happens, some of you laugh, shake your head, or remind yourselves never to vote for one us Republicans. But there’s no real affect to your life. However, when Democrats implode in this state you can be sure that it can and most likely will affect all of us. That’s what we’re witness to in this pension debacle.

To be honest, if the unions don’t like the pension deal, then I’m of the opinion that it is a good deal for Rhode Island. I have very little trust in organizations that for years refused to address the pension problems within the state and continued to support politicians who also refused to address the pension problems within the state. That Raimondo decided to address the pension problems within the state and not step to the union drumbeat is a win for all of us.

Or so I thought because at second glance…

The converse to Raimondo being beholden to unions, as so many politicians are in this state, is the growing opinion that she’s a lapdog to Wall Street, that the decisions she made and policies she advocated for benefit Wall Street and not the state. Why would she do that? I believe the prevailing thought is that she’s worked in that world, has been supported by members of that world, and much of her pension reform agenda was framed within the context of her experience in that world giving significant benefits to Wall Street and not us average joe Rhode Islanders.

So, who do you believe?

I think the truth is somewhere in the middle. I find it a bit offensive that Raimondo would take the opportunity to address the concerns raised by the AFSCME and others while also asking for people to contribute to her campaign fund. Folks, if I am ever fortunate enough to be elected into office, quote me on this - that will not be my style.

And while I realize that’s my personal beef with one of Raimondo’s choices of solicitation, to me what would go a very long way towards resolving the matter, would be an independent investigation into the claims made by the AFSCME. Above, Raimondo said an independent audit found no issue with the state pension numbers, but if Raimondo truly wishes to be transparent and has nothing to hide, why not release whatever information the AFSCME is seeking?

If someone were to ask you what you ate for breakfast, would you hide it? On the other hand, if you stole something, and someone asked you to disclose your whereabouts at the time of the theft, well maybe you have some incentive to keep things quiet.

If Raimondo is looking at higher office, and by many accounts she is, then she can do herself a number of favors by opening up all of the mathematics and current players of the RI pension system to an independent group that will evaluate the claims by the AFSCME. If there’s nothing to hide, then why not hide nothing (double negative, sorry) and debunk the claims made by the AFSCME report? There needs to be an answer to that.

Barring this, we’re only left with questions and an e-mail explaining her actions that ends with this –

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Am I the only one who finds this a bit dubious?

Don can be reached at [email protected]    


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