We notice with some trepidation that Russell Read, the chief investment officer for CalPERS, has resigned after just two years on the job. CalPERS is the massive pension retirement system for state employees, and handles $244 billion in assets in order to guarantee that state workers have the decent retirement and health care they were promised when they signed up. According to the Los Angeles Times, Read has quit his $958,000-a-year job to dabble in environmentally friendly investments, but hasn't come up with any specific project yet. Hmm. Doesn't really pass the stank test, if you ask us.
Let's assume he was fired or quit under duress for a second. As we see it, there could be one of two reasons. The first: he tanked the CalPERS stocks and has to quit before a few hundred thousand bureaucrats skin him alive. According to the latest CalPERS annual report (that would be mid-year 2007), Read's investments netted a 19 percent rate of return, which is decidedly not shabby. But that was before the big subprime meltdown, so you never know; maybe the fund's too deep in mortgage-backed securities. We'll just have to wait and see.
But here's scenario number two: the sinister hand of Gerald Parsky. For the unfamiliar, Parsky is a Los Angeles investment guru and big-shot Republican power broker. As a UC Regent, he forced Treasurer Patricia Small to resign, even though Small's investments had earned the UC pension plan an average rate of return of almost 16 percent over ten years. Control of the fund was then farmed out to private consultants and mutual fund managers. And what happened? The rate of return dropped from 15.6 percent to roughly five percent. UC officials started asking employees to throw money into the pension fund for the first time in years. Quel disastre!
Last year, Governor Arnold Schwarzenegger appointed Parsky to chair a commission to reform CalPERS's finances, specifically in response to rising health care costs. Could Parsky have given the treatment to Read? Like we said, we'll just have to wait and see.