Siphoning Taxpayer Dollars

[P]ublic worker pension fees [are] being paid annually by taxpayers to Wall Street firms, and they have kicked off an intensifying debate over whether such expenses are necessary. Now, a report from an industry-friendly source says those huge levies [that are reported] represent only a fraction of the true amounts being raked in by Wall Street firms from state and local governments.

[...]

Currently, about 9 percent -- or $270 billion -- of America’s $3 trillion public pension fund assets are invested in private equity firms. Assuming the industry standard 2 percent management fee, that quarter-trillion dollars generates roughly $5.4 billion in annual management fees for the private equity industry -- and that’s not including additional “performance” fees paid on investment returns. But even the $5.4 billion number could be drastically understated, according to CEM.

If CEM’s calculations are applied uniformly, it could mean taxpayers and retirees may actually be paying double that $5.4 billion number -- or more than $10 billion a year. Public officials are overseeing this massive payout to Wall Street at the very moment many of those same officials are demanding big cuts to retirees' promised pension benefits.

[...]

“With billions of public worker and taxpayer dollars put at risk in the highest-cost, most opaque investment schemes ever devised by Wall Street for a decade now, investigations that hold Wall Street profiteers accountable are long, long overdue,” said former Securities and Exchange Commission attorney Ted Siedle, who has criticized state and local governments for keeping the terms of their deals with Wall Street firms secret.

[...]

In a 2014 speech, the SEC’s top examiner, Andrew Bowden, sounded the alarm about undisclosed fees in the private equity industry, saying the agency had discovered “violations of law or material weaknesses in controls over 50 percent of the time” at firms it had evaluated. Bowden cited secret agreements between private equity firms and institutional investors like pension funds that allow the firms “to charge fees and pass along expenses that are not reasonably contemplated by investors.”

  IBTimes

And this will surprise you…

Meanwhile, Republicans in Congress have been pushing to roll back rules that subject private equity firms to more scrutiny.

And do you suppose those investment firms are donating to any campaign coffers, hmmmm? Sooner or later, all the money in the country will be on Wall Street.

 ...but hey, do what you want...you will anyway.