* Alexi Giannoulias has a new plan…
The Illinois state treasurer says he wants curb corruption in the state’s five pension systems and that he will unveil a plan on Monday that would pool billion of dollars in investments.
State treasurer Alexi Giannoulias told the Chicago Tribune on Sunday in a story on the newspaper’s Web site that Illinois could save between $50 million and $80 million a year if investment duties for the five government employee retirement systems were merged.
The treasurer’s overhaul also would put board members under stricter ethical standards.
* The idea was met with skepticism…
But the treasurer’s plan could face an uphill climb at the Capitol, where lawmakers say they welcome the ethics reforms but put the idea of combining the investments “on very thin ice.”
“There’s an inherent danger whenever one tries to funnel so much activity into a single source because it weakens the checks and balances over these public funds,” said Sen. Jeff Schoenberg (D-Evanston), who has long worked on pension reform issues. […]
Sen. Kwame Raoul (D-Chicago), who heads the Senate’s pension committee, said he worries that forming one massive investment group could hinder the ability of smaller investment firms, particularly those headed by women or minorities, to get state business.
* Sen. Schoenberg succinctly sums up his reservations at his new blog…
In short, I’m skeptical that bigger always means better when it comes to governing public finance.
The same goes for private financial institutions, as the developments in recent weeks have clearly shown.
* Schoenberg offers up an interesting alternative…
Mandating that everyone associated with state public pension fund transactions is a licensed securities professional more effectively achieves the goal of taking political influence out of the equation. No longer would insiders be able to pass themselves off as marketing consultants for investment banking firms while pocketing huge fees for minimal work on large deals, and the protective umbrella of securities industry’s higher standards would more likely prevent Illinois taxpayers from getting soaked
That’s a good point.
One area of “reform” I’d like to see is a more direct involvement with reviving Illinois’ economy. I wouldn’t mandate investments that would spur job-creation, but what I’d like to see done is along the same lines as the NFL’s coach interview requirements. The pension funds should be required to at least look at job-creating Illinois investments before making their final investing decisions.
* But this is something to keep in mind…
Gov. Rod Blagojevich’s administration tried to consolidate state pension boards during his first year in office, but federal prosecutors allege top campaign fundraiser Antoin “Tony” Rezko went to the governor to block the idea.