In the latest issue of Rolling Stone, contributing editor Matt Taibbi exposes how hedge fund managers are being hired by some states to cut public workers' pension funds and enrich themselves.
Rhode Island was the first state to bring in Wall Street hedge fund managers to fix the state's finances. By a stroke of amazing coincidence, the fees that the hedge fund managers charged the state were roughly the same amount of money that was cut from public pensions, Taibbi noted in Rolling Stone.
In another amazing coincidence, Rhode Island's treasurer, Gina Raimondo, who happens to be a former venture capitalist, led the charge to hire the hedge fund managers.
“So essentially it is a wealth transfer from teachers, cops, and firemen to billionaire hedge-funders," Taibbi told Democracy Now! (video below).
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Taibbi also recalled how Mich. Governor John Kasich (R) brought in unelected “emergency managers” to take over the Detroit city government and dismantle the public pension program; all legal under Michigan law.
“Pension funds are sort of the last great big unguarded piles of money in this country and there are going to be all sorts of operators who trying to get their hands on that money. The person who is benefiting is not some worker who is making $19,000 who is really making out in this kind of corruption. It is the hedge fund who is making $50 and $60 million in fees managing state funds. That is the much more typical narrative," said Taibbi.
Democracy Now! co-host Juan Gonzales added that a big reason state governments are in trouble financially is that they invested in risky stocks and got burned in Wall Street's 2008 crash, which was caused by Wall Street selling worthless mortgage-backed securities.