Corporate Governance

In a news briefing on Monday, October 4, 2010, Mayor Michael Bloomberg happened to mention Bernie Madoff while questioning the return expectations of New York City?s five pension funds, according to a story published on bloomberg.com.

In the same story, bloomberg.com noted that New York State?s main employee pension fund had in September cut its own return expectation from 8 percent to 7.5 percent. The article quoted New York State Comptroller Thomas DiNapoli

Mayor Bloomberg?s comments, which can also be found at the Pensions & Investments website, pionline.com, come while the GASB (Government Accounting Standards Board) holds public hearings this month on its proposals to revise pension accounting standards.  They also follow interview comments on September 30 by financial analyst Meredith Whitney, discussing a 600-page report (available only to clients of her firm) on the finances of the fifteen largest U.S. states. Whitney gained notoriety in 2008 for correctly that Citigroup Inc. would need to cut its dividend.  In her Bloomberg Television interview, excerpts of which can be seen and heard on bloomberg.com, Whitney warned (echoing Warren Buffett) that the federal government will face increasing pressure to bail out struggling state governments.  States meanwhile will be pressured by distressed municipalities.  She also noted that Florida may resort to income taxation.