Pick Wall Street or Main Street?
For Republicans and Democrats, treasurer race a choice between seasoned politicians and candidates with private sector experience
Connecticut has $ 34 billion in its six pension funds, far less than the state needs in order to meet its obligations, but big enough that small investment return fluctuations matter greatly.
Is that an argument for voters to elect a Wall Street professional as the state treasurer?
Republicans and Democrats face that question in both primary elections on Tuesday. Both parties offer the choice of a seasoned money manager or trader who has never held elected office against a veteran, high- profile elected official.
And in both parties, the candidates with Wall Street experience are making the case: Cities and states might not often elect money managers and traders as their treasurers, but Connecticut in 2018 is exactly the time and place for a professional to step into the job.
Not so, the political veterans say; the job is way broader than just investing money.
It’s a question worth pondering at a time when the state’s unfunded liability could be as high as a staggering $ 100 billion, depending on whether we include not only the deep pension hole, but also health costs and regular state borrowing. Assumptions about how fast the funds will grow also affect the size of the shortfall, and right now we’re at high rates most of us would love to see in our 401( k)’ s— 6.9 percent for the state employees’ pension fund and 8 percent for the teachers’ pension fund.
On the Republican side, it’s Thad Gray, 58, who retired in 2017 as a partner and chief investment officer in a midtown Manhattan asset management company that worked with many pension funds, against Art Linares, a three- term state senator from Westbrook who co- founded a solar power installation company at age 19. Gray, of Salisbury, who’s exactly twice as old as the 29- year- old Linares, narrowly won the party endorsement.
Democrats have a less stark Wall Street vs. Main Street choice. Dita Bhargava, of Greenwich, worked for years as a hedge fund manager and in various roles at investment banks. She’d be a newcomer to elected office, but she has been vice chair of the Dem- ocratic state central committee; in recent years she founded and ran a nonprofit working on public education about gender equity issues.
Shawn Wooden, 49, the endorsed Democrat, was until recently president of the city council in Hartford, and while he hasn’t worked in Wall street money management, he’s a partner at the Day Pitney law firm,
leading the public pension fund investment practice.
“I just think there’s way too much money at stake to trust it to someone who doesn’t have investment experience, who hasn’t followed markets for a long time, who hasn’t hired money managers,” said Gray, who holds an MBA from NYU, now the Stern School of Business.
“The job of being treasurer is not to be the state’s chief trader or chief stock picker,” Wooden said in response, as we piece together a simulated conversation through my interviews.
Wooden added, “The treasurer has broad responsibilities for debt management, pension fund management, short- term cash management, corporate governance, workers compensation payments, a college savings program and policy. ... So, the job requires finance, investment, legal, policy and management skills along with experience in government.”
He and Linares, in short, insist their political experience is crucial as they help shape policy — in restructuring the pension funds, to give one giant example — by working with the General Assembly and the governor.
“You could hire Warren Buffett to be the state treasurer and you couldn’t invest your way out of the problems that we are facing today,” Linares said. “We need pension and benefit reform and my experience as a businessman and a legislator translates nicely to the treasurer’s role.
Gray agrees with the part about the hiring. “The job is not to buy stocks and bonds, the job is to hire money managers who buy stocks and bonds,” he said — but he sticks to his insistence that a veteran money manager can best pick money managers.
But he slams Linares directly, and Wooden indirectly, on the way they see the broader roles of the office.
“The treasurer’s job is not a policy job,” Gray said, “it’s an execution job. And I think that his view that his legislative experience has any bearing on the job is completely misplaced.”
Bhargava sees policy as very much a part of the job, with an entire section of her campaign website devoted to socially responsible corporate governance, for example, including gun divestment — which Wooden embraces — and addressing the opioid crisis through investment muscle, as well as reining in CEO pay.
State Treasurer Denise L. Nappier, stepping down after 20 years on the job, preceded by 10 years as the Hartford city treasurer, has been one of the nation’s leading public pension fiduciaries in advocating for responsible corporate governance, at The Walt Disney Co. and many other corporations. She insists that’s all in the name of sound investment returns, while both Republicans in the race say they’ll stay away from that course.
But that’s a debate for the general election. For now, we’re looking squarely at the question of professional money management experience vs. a broader political background, and it’s getting nasty on the Republican side.
“Unlike my opponent and many of his allies, my loyalty and commitment will always be to Main Street Connecticut and the taxpayers, not Wall Street,” Linares said.
Those allegations of so- called Wall Street interests are an insult, Gray said. “I have no financial connection to Wall Street of any kind.”
Each of the four calls himself or herself “the only one in the race” on one point or another. Bhargava is the only woman, she makes clear, and has experience not only on Wall Street but in social issues. Gray not only led an investment firm working with giant pension funds, he previously was an underwriter of corporate debt.
For Linares, it is his experience at Greenskies Renewable Energy, a solar installer that counted Walmart as a customer. “I’m the only candidate in this race that has started a business and invested in growing it in this state. I’ve created 100 jobs and sold the business and it’s still going strong,” he said.
Linares wouldn’t say how important or unimportant Wall Street experience is for the office. Wooden, who previously worked in the investment office of the AFL- CIO and was a member of the state ethics board, called it “one of many relevant skill sets.”
That’s a fair assessment. I’m not going to say how big a factor it is, that’s up to you the voters.
When I asked Gray why more state treasurers aren’t from Wall Street, he quickly noted the pay isn’t even close to what he made on the Street. “You’d have to be inspired by the concept of public service,” he said.
Everyone in the race can agree on that.