Russell Moore: Experience Makes Caprio a No-Brainer for Treasurer

Monday, September 01, 2014

Russell J. Moore, GoLocalProv MINDSETTER™

 

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Frank Caprio

Let's face it: politics is strange business.

There’s no other industry in the world where experience is as undervalued as it is in politics. Thus we have candidates running for political offices where, if these were private sector jobs, they wouldn't dream of applying for. That’s normal in any political cycle. But 2014 has taken this to a whole new level.

Experience counts

In future years, when historians look back on the 2014 Rhode Island elections, this cycle may have the sad distinction of being the one where experience had the least value in the history of Rhode Island.

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At the top of the ticket, we have a serious contender in Clay Pell, who has buoyed his campaign by pumping in millions of own dollars. The problem is the fact that Pell has practically no experience. The man worked 9 jobs in 8 years. But that hasn't stopped people from endorsing and pledging him their support.

Say what you want about General Treasurer Gina Raimondo or Providence Mayor Angel Taveras, and there's plenty negative to say about both, but both those two candidates have the necessary management experience to run this state.

Then there's the Providence Mayoral race. His other issues aside, former Housing Court Judge and Law Professor Jorge Elorza doesn't have any real management experience on his resume. How can someone without personnel management be expected to manage thousands of employees?

Management Experience vs. Promises

Yet the largest example of where experience could be sold short is in the race for Rhode Island General Treasurer. In that race we have Former General Treasurer Frank Caprio, based on his record as Treasurer, in which he served from 2007 until 2010, deserves to be sent back into the office.

Caprio shepherded the fund through the worst economic downturn since The Great Depression. As GoLocalProv MINDSETTER™ and finance professional Michael Riley pointed out, the state got good returns when Caprio was Treasurer, outperforming the state's benchmark policy portfolio.

And just months before the mortgage backed securities that tanked the stock market went bad in 2007, Caprio sold them completely. The state pension fund owned $700 million worth of them before the pension fund got rid of them. After the crash, they were all but worthless.

A good steward

Here's the most important factor in the race: under Caprio's tenure, Rhode Island paid among the lowest fees, on a per capita basis, in the nation. Don't take it from me, that's according to a report by the Maryland Public Policy Institute released last year.

People rightly make a big deal about Rhode Island making national lists for all the wrong reasons, but under Caprio, we were on the list for a good reason: we kept our state pension money out of the hands of the Hedge Fund Cowboys on Wall Street.

Caprio: No love for Hedge Fund Cowboys

So what happened when Caprio left office? Gina Raimondo, the Wolf of Smith Street, took over and, to borrow a word from one of her television commercial stars, "jacked" up the fees to Wall Street, bringing them from roughly $15 million to over $70 million.

And it's not like we've gotten better returns for our investments. Rhode Island's investments have trailed their the S&P 500 as well as the Wilshire Trust Universe Comparison Service, according to a report in the International Business Times.

Gina's Protégé

On the other side of the aisle we have a candidate in Seth Magaziner who studied under Raimondo's tutelage at Point Judith Capital (as a summer intern, he’s never worked a full-time job in our state). This was back when the venture capital firm was still located in Rhode Island.

In addition to working for Raimondo, Magaziner worked as a report writer for Trillium Asset Management. There, he was the low man on the totem poll. But that hasn't stopped him from taking credit for the investment returns of the firm in which the credit belongs to the actual portfolio managers.

Rinse, Wash, Repeat

The truth is, Magaziner hasn't managed one employee in his career, and doesn't have the professional credentials to manage assets.

Yet if Magaziner is elected Treasurer, I'm sure we can expect him to follow in the footsteps of his mentor Raimondo, and send tens of millions more of Rhode Island's pension fund to Wall Street so that the finance professionals can donate him millions of campaign dollars so that he too can run for Governor one day--rinse, wash, repeat.

I'm sure Magaziner's not a bad guy, but when all is said and done, he's certainly said far more than he's ever done. And the Treasurer's office is just too important of an office to entrust to someone with no experience when there's a candidate in the race who acquitted himself quite nicely when he had the job previously.

Based on the evidence and records of the candidates in this race, to not put Caprio back in charge of Treasury, well, that’d be strange indeed.

Editor's Note: Russell Moore worked on Caprio's 2010 gubernatorial campaign.

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A native Rhode Islander, Russell J. Moore is a graduate of Providence College and St. Raphael Academy. He worked as a news reporter for 7 years (2004-2010), 5 of which with The Warwick Beacon, focusing on government. He continues to keep a close eye on the inner workings of Rhode Islands state and local governments.

 

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