CalPERS has $380B to invest, but is befuddled by a blogger
By any measure, CalPERS has big problems. It’s tens of billions of dollars short on what it owes to public employees and retirees, and it’s facing an occasional uprising from local governments worried about the rising costs of participating in the $360 billion fund.
But its leaders time and again find themselves distracted by an entirely different kind of problem -an opinionated financial blogger on the other side of the country who has her hooks in the fund and a couple of key sources on the inside.
That writer, Susan Webber of Naked Capitalism, has uncovered discrepancies in a chief financial officer’s job application that led to his removal. In August, she revealed that CalPERS promotional materials mischaracterized the educational background of Chief Executive Marcie Frost. Now the state treasurer is calling for an investigation in an effort to resolve questions he worries could discredit the fund.
Webber, a New York-based corporate management consultant, says she’s out to hold the nation’s largest pension fund accountable for governance lapses that could threaten defined benefit retirement plans around the country.
“CalPERS seeks national and international media coverage. Then, when the press takes interest in their problems, CalPERS shoots the messenger. I am strong supporter of defined benefits plans who recognizes that CalPERS’ governance and operational failings give grist to critics of public pension plans,” she wrote in a message to The Sacramento Bee.
Yet her style of advocacy leads some CalPERS leaders to close ranks against her reporting. They view her as too closely aligned with camps that want to oust Frost and unseat elected representatives on the CalPERS board.
As local government employees vote in one CalPERS election this month, Webber’s critics see her as a partisan who’s putting public pension plans at risk by overblowing small controversies until mainstream news organizations pick up on her pieces.
“You’re not from California. Why would you be involved in a California election for that board? Why is it so important to you to get someone elected in that board?” said CalPERS Board of Administration Vice President Rob Feckner, a union leader and frequent Webber target.
Webber tends to write with a sharply critical style that can get in the heads of the officials she covers. For instance, her first piece on Frost’s application began, “Marcie Frost, who joined the pension system as CEO in October 2016, even on paper was not qualified for the job. She was only a high school graduate. And even putting that aside, her experience was also wanting.”
The report prompted Feckner and Board President Priya Mathur, who were aware of Frost’s education when they hired her, to dismiss the story as a “spiteful attack.”
Webber, who writes under the pen name Yves Smith, founded the popular financial blog Naked Capitalism in 2006.
It became a must-read during the recession, when Webber made a case for financial reforms on her blog, in a book and on television appearances.
She turned her attention in earnest to the California Public Employees' Retirement System about five years ago and struck up a relationship with then-board member J.J. Jelincic, when both were drawing attention to what they considered to be excessive fees CalPERS was paying to private equity firms.