Randi Weingarten says she just wants to help the financial community. To that end, the president of the American Federation of Teachers has compiled a document called “Ranking Asset Managers.”
The purpose of the pamphlet, released last month, is to promote “transparency and disclosure” among investment managers so that “trustees can make informed decisions about the risks their plans face.”
|AFT calls on pension fund trustees to drop any investment managers that are tainted by connection to free-market nonprofits. They also want those same trustees to force any potential new managers to have to disclose any donations they may have made to the groups on AFT's blacklist.|
What risks, you say? Well, hiring asset managers who have ties of any sort to free-market nonprofit groups like the Manhattan Institute. Which is to say, groups that have raised alarms about public-sector union pensions and proposed serious reforms.
Why should anybody in the financial community worry about that? Well, such hires could result in a sustained public relations attack from AFT, an organization with an annual budget of $320 million and very few scruples in the political arena.
In other words, “Nice asset management company you got here. Be a real shame if something happened to it. Want to participate in our transparency and disclosure effort?”
That's no joke after what happened Thursday to now-former Mozilla CEO Brendan Eich, who was forced to resign over a $1,000 donation to an initiative in California nearly six years ago that opposed gay marriage.
And the AFT report is notable for how nakedly it lays bare the union’s extortionist agenda. While it makes token claims of concern for “fiduciary duties” and all that, it doesn’t make any real effort to pretend that managers or trustees face any danger from these hires other than from AFT itself.
The union’s report begins by claiming that its 2013 version forced Rex Sinquefield to quit Dimensional Fund Advisors. It then adds: “In this 2014 edition … the AFT will be looking more closely at those who are supporting the dismantling of defined benefit plans at the state and municipal level.”
AFT calls on pension fund trustees to drop any investment managers that are tainted by connection to free-market nonprofits. They also want those same trustees to force any potential new managers to have to disclose any donations they may have made to the groups on AFT’s blacklist. This way “trustees can take into account the manager’s support for organizations that attack teacher’s rights.”
The AFT's report doesn't even try to deal with the fact that there's a serious, long-term sustainability problem with state public sector union pensions. Last year, Moody's said those pension funds had unfunded liabilities of $1.9 trillion over the next 20 years. In February, the New York Times reported the figure might be as high as $4 trillion.
This is unacceptable. The good news is that the financial community appears to be ignoring AFT. Sinquefield’s was the only scalp it could claim from last year.
Pension fund trustees could still make use of the report though: If they want farsighted managers with a serious concern for financial soundness, AFT has a helpful roadmap to finding them.