Let it burn

Mitch's official policy regarding the troubled firefighters' pension.

According to the latest independent audit, the fund took a roughly $40.2 million loss on its investments in 2013, in large part because it was forced to acknowledge the deteriorating value of real estate and other investments on its balance sheet.

On top of that, Mayor Mitch Landrieu’s administration has refused to hand over enough money from the city’s general fund during the past few years to entirely make up for declining assets, forcing the fund’s managers to cannibalize investments in order to pay current beneficiaries.

That left the fund with about $84.8 million in net assets available to pay retirement benefits at the end of 2013, a 41 percent decline from a year earlier. In 2011, that figure stood at $158.5 million.

Moreover, a good portion of what remains is in the form of real estate and other investments that could not be sold off quickly, should the extra cash be needed.

We all understand the city's budgetary problems.  They're not unlike what other cities are facing in many respects.  But it's important to point out that a political leadership that actually believes workers shouldn't lose their retirement to the vicissitudes of the financial crisis would try to find ways to help muddle through.

Mitch is asking for a property tax increase this fall in order to fix some of this. But he's only doing that because several court rulings have mandated that he do something.  As a matter of philosophy he seems to favor scrapping the pension altogether.. thus leaving working people to pick up the tab for bankers' crimes. 

Also.... I sure hope the firefighters don't have any money in securitized re-packaged auto loans.

Auto loans to people with tarnished credit have risen more than 130 percent in the five years since the immediate aftermath of the financial crisis, with roughly one in four new auto loans last year going to borrowers considered subprime — people with credit scores at or below 640.

The explosive growth is being driven by some of the same dynamics that were at work in subprime mortgages. A wave of money is pouring into subprime autos, as the high rates and steady profits of the loans attract investors. Just as Wall Street stoked the boom in mortgages, some of the nation’s biggest banks and private equity firms are feeding the growth in subprime auto loans by investing in lenders and making money available for loans.

And, like subprime mortgages before the financial crisis, many subprime auto loans are bundled into complex bonds and sold as securities by banks to insurance companies, mutual funds and public pension funds — a process that creates ever-greater demand for loans.

Update: This morning the judge rejected Stacy Head's stab at trying to muddle through.

Head, taking the witness stand in Civil District Court, offered to bring a motion at the council that would take $2 million this year from the New Orleans Police Department budget, plus raise about $1.4 million by furloughing current firefighters one day per month through the end of the year, although there was confusion about exactly how many days would be required.

While that would cover only a fraction of the $17.5 million, Head argued that it would be more than enough to keep the pension fund from continuing to shrink, as it has over the past few years.

Civil District Court Judge Robin Giarrusso rejected the offer from the bench, ordering the city to come up with the full judgement before a Sept. 3 hearing and threatening to hold certain officials -- she did not say which -- in contempt of court. Presumably that could mean fines or even jail for city officials.