Reprinted from Truthdig
Dome of State Capitol Building in Springfield, Illinois.
(Image by Shutterstock) Permission Details DMCA
No runoff will be needed to declare one unambiguous winner in this month's gubernatorial elections: the financial services industry. From Illinois to Massachusetts, voters effectively placed more than $100 billion worth of public pension investments under the control of executives-turned-politicians whose firms profit by managing state pension money.
The elections played out as states and cities across the country debate the merits of shifting public pension money -- the retirement savings for police, firefighters, teachers and other public employees -- from plain vanilla investments such as index funds into higher-risk alternatives like hedge funds and private equity funds.
Critics argue that this course has often failed to boost returns enough to compensate for taxpayer-financed fees paid to the financial services companies that manage the money. Wall Street firms and executives have poured campaign contributions into states that have embraced the strategy, eager for expanded opportunities. The election results affirmed that this money was well spent: More public pension money will now likely be entrusted to the financial services industry.
In Illinois, Democratic incumbent Pat Quinn was defeated by Republican challenger Bruce Rauner, who made his fortune as an executive at a financial firm called GTCR, which rakes in fees from pension investments. Rauner -- who retains an ownership stake in at least 15 separate GTCR entities, according to his financial disclosure forms -- will now be fully in charge of his state's pension system.