By William K. Black
January 26, 2017 Bloomington, MN
CalPERS was once the crown jewel of institutional investors, known for combining competence, integrity, and care. It invests funds and pays the pensions of California State workers. Over a decade ago, however, CalPERS’ senior managers and board became a cesspool that stood for the opposite. CalPERS’ corrupt culture is deeply rooted. Various California’s Treasurers have tried to clean up the mess, but the reforms have failed because few senior officers and board members have been willing to take on the rot with the forcefulness required.
I worked closely with board members in my role as the general counsel of Federal Home Loan Bank of San Francisco. It takes enormous courage to confront senior corporate officers or fellow-directors when they are maintaining a solid front. We had a good board, officers, and institution. In an institution with a deeply rooted, sick culture like CalPERS, everything works against forceful directors trying to cure the rot. They have to confront a phalanx of directors and officers who are genuinely horrified that someone would disturb the highly prized decorum of the boardroom. The officials maintaining that the sick culture is not sick become enraged at anyone that blows the whistle on their unwillingness to act aggressively to cure the sick culture.
By William K. Black
January 30, 2017 Bloomington, MN
The troika refers to the European Union (EU), European Central Bank (ECB), and the International Monetary Fund (IMF). The IMF, traditionally, was the greatest proponent of any international entity of inflicting extreme austerity on nations suffering economic crises. The IMF’s economists have increasingly reviewed the evidence and concluded that austerity reduces growth and that putting nations into inescapable debt traps is stupid and harmful. The EU and the ECB, however, have been impervious to these economic studies and intent on hammering the Greeks. The purported EU “bailout” of Greece is an exercise in EU propaganda. Overwhelmingly, EU aid involving Greece goes to Greek banks – and the bank bailout bails out the creditors of Greek banks. Those creditors, overwhelmingly, are EU banks.