Friday, February 05, 2010

Letter to Dan Scripps

Dear Dan,

I'm writing in regard to the large investment losses shown in the Comprehensive Annual Financial Report (CAFR) of the Michigan Public School Employees Retirement Fund on pp 24-25 which I have attached. The latest CAFR shows that the net assets of that fund dropped from $49 billion in 2007 to $35 billion in 2009 due to investment losses.

I have written to you in the past to urge you to introduce legislation to start a state bank for the state of Michigan, similar to the Bank of North Dakota which has served that state well since 1919.(see Bank of North Dakota) I would note that North Dakota is currently the only state that has a fiscal surplus.

My personal concern is for friends of mine. The husband is a lifelong school teacher who is now nearing retirement age. I am hoping that they will be able to enjoy their well earned pension without any reductions.

While I have not yet reviewed the entire state CAFR, I believe that a similar pattern of investment losses will be found. I don't understand why this vital capital is entrusted to Wall Street banks. From what I've been reading, in the derivative swaps game, the hedge funds are the "smart money" and public pension funds are the "dumb money". It seems to me that these funds would be safer with direct oversight by the state treasurer (and the citizens). Also, it seems to me that this money could be a great benefit to the Michigan state economy if it were made available for low interest loans to businesses and home owners here, as it would be if held in a state bank for Michigan. I don't need to remind you of the high unemployment and lagging economy here.

The establishment of state banks in Oregon and Florida is a principal issue for Democrat gubernatorial candidates and is also a pledge for a Green Party candidate in Illinois

While you are young and newly elected, in the words of the bard "there is a tide in the affairs of men, which, taken at the flood, leads onward to victory". So, I urge you to give serious consideration to this matter.

Respectfully yours,
Warren Raftshol