Better Late Than Never: N&O Reports on Cowell’s Facebook Debacle

By | Posted in Budget & Taxes |
2
Aug
22
Tweet This ArticleTweet Share on FacebookShare Email This ArticleEmail

Six days ago, I blogged on a story regarding State Treasurer Janet Cowell’s decision to invest millions of state pension fund dollars in the Facebook IPO. Erskine Bowles, who sits on Facebook’s board, had previously hosted a fundraiser for Cowell. Now, as part of a lawsuit against Facebook, North Carolina’s pension fund is one of the lead plaintiffs due to the size of the loss it suffered. The irony is now Bowles is one of the defendants in the suit.

Today, the N&O ran this editorial informing readers about the story.

Fair enough, although it does raise eyebrows about the pension fund, by tradition conservatively managed, going gaga over Facebook. But then the story begins to twist and turn – because, on the face of it, Cowell and the fund seem to have had certain connections to the Facebook IPO that “the public” did not, in the form of Erskine Bowles.

Bowles is 1) on the Facebook board of directors and 2) on the board of Morgan Stanley, which helped underwrite the IPO – that is, bring it to market.

Crandall Bowles, Bowles’ wife, raised money for Democrat Cowell’s election campaign.

And the former UNC system president and Simpson/Bowles budget guru is, after all, a businessman. Carousel Capital of Charlotte (Bowles was a co-founder and is senior adviser) manages a portion of the state pension fund’s investments.

Lots of threads there for conspiracy buffs to stitch with, but then there’s this: in deciding to sue Facebook and its underwriters, Cowell is also suing Bowles (among others). He’s a named defendant.

 Now also being reported is the fact that Cowell authorized major pay raises for pension fund officials, as most state workers had their salaries frozen.
Democratic State Treasuer Janet Cowell is facing questions about why she gave top officials who manage the state’s $75 billion pension fund big raises even as most state workers didn’t get a salary bump.
By the way, the most recent publicly available analysis shows the major state pension fund with an unfunded liability of $2.8 billion (calculated as of Dec. 31, 2010). This marks a $5.8 billion swing in the fund’s asset/obligations ratio from 2005, when the fund had a calculated surplus of assets of $3 billion.
The fund’s poor performance of course requires a taxpayer bailout. State taxpayers are on the hook for an estimated $811 million contribution to the state pension fund this year to help get it back on track.

One Comment on this post

  • MS says:
    Aug 22 at 10:21

    And let’s not forget that the state has more than $32 billion in unfunded healthcare liabilities for retired state employees.

One Trackback

Post A Comment

Your email is never shared, but is required for commenting. Required fields are marked *

*

*