Pluralistic: 05 May 2022

Originally published at: Pluralistic: 05 May 2022 – Pluralistic: Daily links from Cory Doctorow


Today's links



A street scene, looking down Front Street from Wall Street. Superimposed on the image are a crook-backed elderly beggar, the Charging Bull statue, and a Wall Street street-sign. Dancing atop the sign is a caricature of Rich Uncle Pennybags from Monopoly; he has removed his face to reveal a grinning skull beneath.

A New York law to end to Wall Street's pension ripoff (permalink)

The "Shield of Boringness" – c.f. Dana Claire – is a scammer's weapon. Layering scams in complexity lets villains get away with all kinds of nastiness. Some things are hard to understand because they're complex, but some things are complex so they'll be hard to understand.

In finance, this is sometimes called MEGO: "my eyes glaze over" – complex scams designed to bore their victims into submission. All of us are vulnerable to MEGO, because there's only so many hours in a day and at a certain point, your eyes just start to slide over the legal mumbo-jumbo without any of it registering.

For me, the most powerful MEGO is the bottomless scamming of public pensions by private equity firms. In some distant way, I knew that there was something really terrible going on there, and that pension managers and PE looters were colluding to rip off billions, maybe trillions, from workers' pensions. But despite how awful that is, every time I encountered an article about this scam, I just bounced off it. Just the word CALPERS was enough to send me into a coma.

But finally a piece of reporting has penetrated the Shield of Boringness, perhaps because it's a rare (unprecedented?) piece of good news about this whole awful mess. Writing for The Lever, Matthew Cunningham-Cook reports on New York A09948, "to amend the retirement and social security law, in relation to disclosing certain investment managers and investments."

https://www.levernews.com/wall-streets-biggest-secret-could-be-exposed/

The things this law would require are a kind of inverse-mold of the scam itself, like flipping a doctored photo to negative to spot the tampering. If this law passes, then, for the first time, the Wall Street firms that handle New York's $269B public pension would have to disclose the cozy – and nakedly corrupt – contracting terms they arrive at with the funds' overseers. For example, it would require disclosure of when fund managers charge private jets to the pension fund:

https://www.ft.com/content/1212b266-8760-4766-a03e-9e7db203b5d2

But gold-plated expenses are just the obvious part of the corruption. The good stuff is pure MEGO: for example, the Carlyle Group's contracts reserve the right to invest pensions' money in ways that lose money for the pension, but make money for Carlyle Group execs and their pals:

https://files.adviserinfo.sec.gov/IAPD/Content/Common/crd_iapd_Brochure.aspx?BRCHR_VRSN_ID=500146

Leaked contracts reveal that public pensions have to promise not to demand a jury trial if they get ripped off by private equity firms, and to indemnify fund managers for all misconduct unless it rises to the (very high bar of) "fraud, gross negligence or willful misconduct."

Some of these contracts explicitly waive the "fiduciary duty" – the obligation on fund managers to put the pensioners' interests ahead of their own.

If passed, the New York bill will expose standard contracting terms that stretch out nationwide, thanks to all of the cities, towns and states that enter into comparable high-risk/high-fee arrangements with the same Wall Street firms.

It will force private equity firms to disclose what they're buying with pensioners' money – for example, if they're buying group homes, laying off staff, and killing and maiming the residents, as KKR did with public pension money:

https://www.buzzfeednews.com/article/kendalltaggart/kkr-brightspring-disability-private-equity-abuse

These disclosures will bring more scrutiny to the public officials who want to hand even more pension money to PE firms, like NYC comptroller Brad Lander, who received giant campaign contributions from the finance industry and abandoned his campaign promise to halt public pension investments in planet-killing industries:

https://www.levernews.com/new-yorks-pension-reformer-goes-rogue/

Wall Street looters will fight this tooth-and-nail. They call these contracts "trade secrets" and compare forcing disclosure of their deals to forcing Coke to reveal its secret recipe:

https://www.pehub.com/confidentiality-of-limited-partnership-agreements-is-paramount/

It's their position that terms governing the the public billions they're entrusted with are immune to transparency laws, and they advise officials to resist public records requests regarding their deals:

https://www.wsj.com/articles/buyout-firms-push-pension-funds-to-keep-information-under-wraps-1415142588

These firms killed similar legislation in Kentucky:

https://www.reuters.com/article/us-kentucky-pensions/kentucky-pension-funds-push-back-against-fee-disclosure-bill-idUSKCN0VW22O

They buried a class-action suit to force the State of Kentucky to disclose the terms of its deal with the Wall Street firms that lost billions in pension money:

https://www.nakedcapitalism.com/2021/02/mayberry-v-kkr-kentucky-attorney-general-shows-true-colors-looks-over-eager-to-settle-pathbreaking-pension-case-rather-than-inconvenience-private-equity-kingpins-blackstone-and-kkr.html

In Colorado, an effort to force disclosure died when public pension officials killed it:

https://leg.colorado.gov/sites/default/files/2018a_200_signed.pdf

The Center for Economic and Policy Research's co-director Eileen Appelbaum succinctly described the disclosure demand to Cunningham-Cook: "How good are the contracts? What are the fees, expectations in terms of returns?" These are modest demands, and the outright refusal to meet them should raise alarm bells.

This is especially true in light of the corrupt arrangements that have been revealed, like former NYC Comptroller Alan Hevesi's conviction of taking bribes from Carlyle Group in exchange for access to the city's pension money. DiNapoli, the new comptroller, promised an ethics overhaul – and then spectacularly failed to deliver. How bad is it? Navnoor Kang, the former NYC head of fixed incomes, went to prison in 2018 for taking bribes from brokers:

https://www.wsj.com/articles/former-new-york-pension-fund-executive-sentenced-to-21-months-in-prison-1531429910

And now, DiNapoli's Chief Investment Officer Vicki Fuller has jumped ship for PE giant Blackstone after doing business with the company on the city's watch. No word on whether she'll be representing Blackstone in its negotiations with her former colleagues.

https://realassets.ipe.com/news/new-york-common-puts-500m-into-blackstone-and-prologis-funds/10025112.article

This transparency bill cuts through MEGO. Simply enumerating the things it will force disclosure of is a powerful reminder of how bad business-as-usual is today.

https://nyassembly.gov/leg/?default_fld=&leg_video=&bn=A09948&term=0&Summary=Y&Memo=Y&Text=Y

(Image: Ken Lund, CC BY-SA 2.0; ; JSquish; CC BY-SA 3.0; Sam Valadi, CC BY 2.0, modified)


Hey look at this (permalink)



This day in history (permalink)

#20yrsago Shopsin's Restaurant finally allows a review https://web.archive.org/web/20020426044055/http://www.newyorker.com/printable/?fact/020415fa_FACT

#10yrsago Lost trove of D&D co-creator unearthed, up for auction https://www.wired.com/2012/05/geekdad-exclusive-auction-preview-of-dd-co-creators-personal-collection-and-archives-games-secrets-to-be-revealed/

#10yrsago Jonathan Lethem discusses his tribute to Talking Heads’ Fear of Music https://www.wired.com/2012/05/jonathan-lethem-fear-of-music/

#10yrsago Aerial view of Disneyland’s Haunted Mansion facade and ride-building https://longforgottenhauntedmansion.blogspot.com/2012/05/ghostland-around-us-beneath-us.html

#10yrsago UK nightclub bouncers demanding access to your Facebook profile as a condition of entry https://www.bbc.com/news/newsbeat-17930370

#10yrsago Tribute to Disneyland’s “secret restroom” http://www.secretrestroom.com/

#5yrsago Teacher: Jostens Yearbook is a giant scam that stole from our school for years https://np.reddit.com/r/Teachers/comments/694yxi/jostens_yearbooks_scammed_our_high_school_for/

#5yrsago Flint threatens to take away 8,000 families’ homes for failure to pay bills for poisoned water https://nbc25news.com/news/local/flint-puts-8000-people-on-notice-for-tax-liens-for-unpaid-water-bills

#5yrsago Michigan students stage sit-in in solidarity with laid-off teachers https://www.wxyz.com/news/students-reportedly-protesting-budget-cuts-at-metro-detroit-high-school

#5yrsago My column about Snowden, surveillance and WALKAWAY in the International Business Times https://www.ibtimes.com/unchecked-surveillance-technology-leading-us-towards-totalitarianism-opinion-2535230

#1yrago Stimmies killed the McJob: Job creators hate him https://pluralistic.net/2021/05/05/clarkes-third-law/#precariat-nostalgia



Colophon (permalink)

Currently writing:

  • Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. Yesterday's progress: 508 words (91325 words total).
  • A Little Brother short story about DIY insulin PLANNING

  • Vigilant, Little Brother short story about remote invigilation. FIRST DRAFT COMPLETE, WAITING FOR EXPERT REVIEW

  • Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

  • Spill, a Little Brother short story about pipeline protests. FINAL DRAFT COMPLETE

  • A post-GND utopian novel, "The Lost Cause." FINISHED

  • A cyberpunk noir thriller novel, "Red Team Blues." FINISHED

Currently reading: Analogia by George Dyson.

Latest podcast: Revenge Of The Chickenized Reverse Centaurs

Upcoming appearances:

Recent appearances:

Latest book:

Upcoming books:

  • Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin, nonfiction/business/politics, Beacon Press, September 2022

This work licensed under a Creative Commons Attribution 4.0 license. That means you can use it any way you like, including commercially, provided that you attribute it to me, Cory Doctorow, and include a link to pluralistic.net.

https://creativecommons.org/licenses/by/4.0/

Quotations and images are not included in this license; they are included either under a limitation or exception to copyright, or on the basis of a separate license. Please exercise caution.


How to get Pluralistic:

Blog (no ads, tracking, or data-collection):

Pluralistic.net

Newsletter (no ads, tracking, or data-collection):

https://pluralistic.net/plura-list

Mastodon (no ads, tracking, or data-collection):

https://mamot.fr/web/accounts/303320

Medium (no ads, paywalled):

https://doctorow.medium.com/

(Latest Medium column: "End-To-End Encryption is Too Important to Be Proprietary" https://doctorow.medium.com/end-to-end-encryption-is-too-important-to-be-proprietary-afdf5e97822)

Twitter (mass-scale, unrestricted, third-party surveillance and advertising):

https://twitter.com/doctorow

Tumblr (mass-scale, unrestricted, third-party surveillance and advertising):

https://mostlysignssomeportents.tumblr.com/tagged/pluralistic

"When life gives you SARS, you make sarsaparilla" -Joey "Accordion Guy" DeVilla