As the public employee union strikes that roiled Wisconsin spread to other states, fund managers which think public unions have had it too good for too long may be better off keeping their opinions to themselves – unless they want to get fired by their LPs.
In February, Joseph Alejandro, a trustee of New York City’s police retirement fund, proposed a rule that would allow the fund’s board to dismiss any money manager who says anything disparaging about it, its beneficiaries, trustees or employees.
“The intent,” Alejandro told Bloomberg in an interview, is to “prevent money managers from taking positions that are essentially opinions based on political viewpoints”.
Last year, Blackstone Group strategist Byron Wien got the firm into trouble with the pension when he said: “Retirement benefits for state workers, really not only in New York, California and New Jersey, but throughout the country, are very generous. Too generous.”
The remark prompted Blackstone president Tony James to send a letter to the head of the New York City Employees’ Retirement System to smooth things over. A reminder, perhaps, that it may be wise for fund managers to sit on the sidelines of the impending war over public sector pensions in the US and elsewhere.