Biden Picking Gina Raimondo As Treasury Secretary Makes As Much Sense As Hiring Dracula To Guard National Blood Bank
Apparently Joe Biden’s transition team is considering Gina Raimondo, the hugely unpopular governor of Rhode Island as the next Secretary of the Treasury should Biden win. This makes as much sense as hiring Dracula to guard the national blood supply.
Raimondo is a failed venture capitalist who, in 2006, talked the Employee Retirement System of Rhode Island into investing $5 million in an unproven fund offered by her firm. In the firm’s pitch to the pension, on the one hand, it argued the pension should invest since it was the only venture firm based in Rhode Island. On the other hand, the pitch book touted that the infant firm was backed by an out-of-state New York hedge fund billionaire.
The state pension not only committed to a ten-year investment in Raimondo’s fund, remarkably, it agreed to pay her a higher fee than she asked for. (Raimondo’s venture firm promptly relocated to Boston.)
With a commitment from the state pension that would pay her $125,000 a year for at least the next ten years, Raimondo moved onto politics.
Once again, thanks to tons of financial support from her many out-of-state Wall Street friends Raimondo initially got herself elected as General Treasurer of the state. As Treasurer, she became the chief fiduciary overseeing the state pension. To the delight of her Wall Street pals, she then had the power to steer state pension money into costly funds they managed.
In short, Raimondo, the fox who had virtually no experience managing investments of any kind, took over management of the $8 billion henhouse—the state pension—with more than a little help from her Wall Street friends.
Once Treasurer, she immediately pushed through the legislature a disingenuous “Pension Reform” proposal which amounted to slashing government workers’ retirement benefits and wildly gambling on the highest-cost, highest-risk investments the state pension had ever made. Her $1 billion disastrous hedge fund gamble cost the state approximately $1 billion before her successor, now-Treasurer Seth Magaziner, very publicly abandoned it and adopted his so-called “Back to Basics” investment strategy.
So much for Raimondo’s supposed investment acumen.
Raimondo presciently sprinted from the Treasurer’s office to the Governor’s in 2014—before the wreckage of her hedge fund gambling became well-documented. (My 2013 forensic investigation into Raimondo’s hedge fund gamble on behalf of the American Federation of State, County and Municipal Employees Council 31, predicted it would end badly.)
Breaking state records again for out-of-state campaign contributions from her Wall Street friends, Raimondo got herself elected as Governor—twice.
For the past 13 years, throughout her tenure as an elected public official, she has continued to receive $125,000 in compensation—in addition to her government salary—from the state pension related to that $5 million losing investment.
A $125,000 bonus a year—every year for the past 13 years from a pension that she claimed could not afford to pay benefits promised to pensioners.
A $125,000 bonus regardless of her performance—no matter how badly she performed.
Plus, the potential to receive millions a year more—millions—from the pension if her performance was even AVERAGE.
The only reason she has not pocketed millions more than her $125,000 per year minimum, which I’ve called her “Loser’s Bonus” (a bonus even losers get) is because her performance has been far below average.
The pension was scheduled to exit Raimondo’s fund in 2016 but the firm, supposedly exercising its discretion under a secret agreement the state supposedly signed, unilaterally extended the life of the investment in 2017, and again in 2018.
In late 2018, Treasurer Seth Magaziner disclosed, for the first time, the 2006 secret agreement the pension signed with Point Judith allowed Raimondo’s fund to hold onto state money yet another year if 80 percent of investors agree.
The state pension still can’t exit Raimondo’s losing fund.
Given Raimondo’s deep unpopularity with labor and taxpayers, longstanding demonstrated incompetence in financial matters and cozy relationship with Wall Street, I can’t think of a worse choice for Secretary of Treasury.
Then again… if Bernie Madoff weren’t in jail for the next 150 years….