Calpers triggers legal fight with bankrupt San Bernardino over pension debt


By bgamall4   Follow   Wed, 28 Nov 2012, 8:43am   1,922 views   38 comments
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http://finance.yahoo.com/news/exclusive-calpers-triggers-legal-fight-093110813.html I have been saying for some time that this is Calpers versus Wall Street. Will the Federal judge screw with California law and let Wall Street win?

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  1. Ceffer


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    1   4:59pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    It will be a fight among the creditors, secured, unsecured. The best Calpers can hope for is to be first in line amongst unsecured creditors. The situation hasn't been tested because the cities that have gone bankrupt did not want another costly legal entanglement and deferred to Calpers. However, the creditors can sue each other apparently, and that means Wall Street vs. Calpers.

    I would imagine that ultimately Calpers will lose. Cowardly, pork barrel politicians won't solve the mess, only bankruptcy can cut the Gordian knot of waste and special interests.

  2. bgamall4


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    2   5:52pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Ceffer says

    I would imagine that ultimately Calpers will lose. Cowardly, pork barrel politicians won't solve the mess, only bankruptcy can cut the Gordian knot of waste and special interests

    That would be too bad, because California law protects Calpers.

    Wall Street must not win this.

  3. Bap33


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    3   7:10pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Oddly, the teacher's version of Calpers just don't get much press.

  4. Bellingham Bill


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    4   7:48pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    CalSTRS is at a 70% funding level:

    http://www.pionline.com/article/20120409/REG/120409899

    with $155B of investments under management.

    CalPERS has $240B and allegedly is 80% funded.

    But both of these funding levels are assuming ~7.5% long-run returns.

    CalPERS's actual return for FY11 was . . . 0.1%.

    The missing 7.5% of interest income is . . . $18B or so that either has to be made up immediately, or a lot more down the road, since by the rule 72, 7.5% interest doubles the principal in only 10 years . . .

    I don't know what's going to happen with California's pension issue, but it's a major, major problem coming down the pike.

    And all the people with spiked pensions and other miscellaneous bullshit is going to create an immense public backlash, too.

    The Howard Jarvis people called me into a paid focus group not too long ago, and my advice to them was nail the unions on this pension issue, since that's their achilles heel.

  5. Ceffer


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    5   8:00pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    California judges have pensions, too. It would seem they have an automatic conflict of interest, which points to the Feds resolving the legal issues above the state level. State laws exist in force where they don't conflict with Federal laws. One would assume that the same legislators that give themselves the store are the ones who constructed the state laws about pensions.

  6. bgamall4


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    6   8:09pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    The Howard Jarvis people called me into a paid focus group not too long ago, and my advice to them was nail the unions on this pension issue, since that's their achilles heel.

    So you are a Wall Street creep? Or what are you?

  7. bgamall4


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    7   8:11pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Thus this part is a complete legal fantasy on Calpers' part:

    Calpers expressly stated that it was "concerned about inappropriate preferential treatment that might be given to other creditors" in San Bernardino's bankruptcy. Calpers has long argued that pension contributions cannot be touched, even in a bankruptcy.

    Two laws. One governs pensions and another governs bankruptcy. The pension law should be preserved.

  8. Ceffer


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    8   8:19pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    The Rhode Island case does not bode well for Calpers. It is a feast for lawyers, but they should hone their negotiation skills rather than waste more mounds of money in court holding out for vapor.

  9. Bellingham Bill


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    9   8:23pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    bgamall4 says

    So you are a Wall Street creep? Or what are you?

    random "focus group". Paid $100 + a free subway sandwich. Thanks Howard Jarvis!

    I detest Howard Jarvis organization completely, but everyone has their price.

    I also think the unfunded liability issue for California is truly stupendously critical. The two pension funds need 5% REAL returns or things are going to get pretty sticky 10-20 years down the road.

    http://research.stlouisfed.org/fred2/series/WGS30YR

  10. Entitlemented


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    10   9:11pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    As an Engineer who has a few patents and made a bunch of equipment used in part by law enforcement, I am a bit alarmed by the pay of police in Bell California.

    http://latimesblogs.latimes.com/lanow/2012/08/ousted-bell-police-chief-wants-severance-pay-.html

    Might also have something to do with my pension is about 1/40th of this dude.

    Keep on voting for Democrats, Cali............

  11. Goran_K


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    11   9:13pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (2)  

    CalPERs helping put another city into fiscal ruin. No surprise here.

  12. Entitlemented


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    12   9:22pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    Developing a Bell Curve, If we have about 30K Cali Union and Public workers getting over $100K, this is an annual obligation of about $3B per year. This is about 1/4th the Cali Annual Deficit, I recall.

    Would really be interesting to track back to when Cali was making computers, electronics, Blackbirds, Apollo, and Space Shuttle.

    The private sector shrivels, and the public sector grows. Democrats are brilliant!

  13. Goran_K


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    13   9:31pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Social engineering never works. Want to see what it eventually creates? Just take a look at Stockton, CA.

  14. Bellingham Bill


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    14   9:34pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Entitlemented says

    Cali was making computers

    Dude, Apple & Google's market caps are $800B.

    Entitlemented says

    The private sector shrivels, and the public sector grows. Democrats are brilliant!

    California's imbalance is mainly our high cost of housing, which is in fact stripping hundreds of billions out of the paycheck economy into the hands of the 1%.

    Compared to that structural imbalance the pension BS is miniscule.

  15. Bellingham Bill


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    15   9:35pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    Just take a look at Stockton, CA.

    take a look at Stockholm, SE and get back to me on that minarchist bullshit.

  16. Entitlemented


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    16   9:42pm Wed 28 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Take out a calculator. Most of the stuff of Apple is made in China, whos labor costs are lower, and have enterprize low tax zones.

    Now look back to 1980 when 20% of Californians worked in R&D, manufacturing, and Engineering, of products that could be sold and taxed in California.

    Now look at Californias 8% current manufacturing and R&D (Counting also that the stuff not all made here). I think that agric is also counted in this?

    Also, look up where Apple is incorporated.

    Before you yell, please punch in a few number in your calculator.

    It not just housing, Dems have lowered rates to keep housing high (for continued payments to CALPERS, and other treats)

  17. Goran_K


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    17   9:58pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    take a look at Stockholm, SE and get back to me on that minarchist bullshit.

    Yes, their welfare state giving out ridiculous loans to any unqualified buyer nearly cost the country its solvency in 1992. Guess how they got out of that pickle?

    Oh yeah, reducing welfare, and privatizing public services (including credit). Now they are one of the wealthiest nations in Europe.

    You want to take your foot out of your mouth now?

  18. Bellingham Bill


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    18   10:08pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Entitlemented says

    Also, look up where Apple is incorporated.

    The Company is a California corporation established in 1977.

    Now look back to 1980 when 20% of Californians worked in R&D, manufacturing, and Engineering

    GMAFB.

    The 1980s saw the government tear out our defense establishment for the most part. That produced the 1990s LA recession, and LA remained depressed until the housing boom got started there ca. 2002.

    It is true that mfg has taken it in the pants, falling from 2M in 1990 to 1.2M today, but that's to be expected when China's monthly wage is $200-300.

    Entitlemented says

    Dems have lowered rates

    part of the problem with you conservative posters here is that you've got Dems on the brain. You guys can't think at all about our real problems, you just point the finger at Democrats and blindly blame them without actually detailing the alleged "Democratic" screwup.

    When in fact a lot of the root causes we face now are actually caused by conservatives and their dysfunctional ideology of greed, and fraud -- disempowering government and then wondering why their sanctified "free market" totally fucks itself up not soon after.

    "Dems" didn't lower rates, first Greenspan did in the 2001-2004 period (to do what he could to get Bush reelected) and then since 2008 Bernanke has lowered rates because the alternative is simply a cross-default collapse of the economy of debt, an economy of debt CREATED when the Republicans were running the show:

    http://research.stlouisfed.org/fred2/graph/?g=dez

  19. Bellingham Bill


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    19   10:11pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    You want to take your foot out of your mouth now?

    Sweden is still a million times more socialist than us.

    http://en.wikipedia.org/wiki/File:Tax-Revenues-As-GDP-Percentage

    Dodge noted, though.

  20. Vicente


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    20   10:16pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Ummm...the US Constitution explicitly gives Congress the right to set bankruptcy law, dude. The Supremacy Clause clearly applies thereby.

    STATES RIGHTS!

    Let's Teabag those Federales.

  21. Entitlemented


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    21   11:00pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Apple is headquartered in CA, Incorporated in: http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?pagewanted=all

    The State of CA chased out much industry in tandem with the decline of defense spending.

    Dems caused housing to go up with CRA, and the imposition of CRA funding on FHA and private loans.

    NAFTA was debated, and Ross Perot, the only one with a business background debating was correct.

    Californias liberal mindset did California in. If high taxes and large government were the way to go, then CA would be flush with money, the State and Cities would be solvent. However, even with the highest amount of taxes, lots of technology, CA is having severe issues.

    NAFTA did not work, - we cant outsource our way to prosperity. Its taken some time for us to get in this situation, but many cannot even see the cause and the effect.

  22. Entitlemented


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    22   11:27pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Clinton alteration of CRA forced much more securitization.

    Rubins, an treasuring for Clinton and then moved on to CITI, and oversaw an exceleration of CDO by CITI.

    However, they needed Glass Stegal overturned, and the dems got this done by marching 30 Dems into the leading Republicans office when he did not want to undo Glass Stegal.

    So the liberals actually did the subprime mess, but the media does not bring this up.

    The US government meddling in home finance did this. And the Dems altruistic goals for the poor? They fared worse than the middle class............

  23. Goran_K


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    23   11:39pm Wed 28 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    Sweden is still a million times more socialist than us.

    http://en.wikipedia.org/wiki/File:Tax-Revenues-As-GDP-Percentage

    Dodge noted, though.

    Yeah, you totally got me.

  24. bgamall4


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    24   12:17am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Goran_K says

    CalPERs helping put another city into fiscal ruin. No surprise here.

    Sorry, Wall Street helped a lot of cities into ruin.

    http://bgamall.hubpages.com/hub/Wall-Street-Bankers-Are-the-Prime-Opposition-to-Public-School-Teachers

    and

    http://www.businessinsider.com/cities-be-like-oakland-and-walk-away-from-interest-swap-payments-to-goldman-and-bankers-2012-7

    I wrote both. It is all a scam. First, the scam is with charter schools that cherry pick students and are backed by big money to bash teachers' unions and second are the cities who have been helped by Bernanke to reap a windfall from governments, city governments included.

  25. bgamall4


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    25   12:18am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike (1)  

    Goran_K says

    Social engineering never works

    True, but then why do you support the greatest social engineer, Wall Street?

  26. bgamall4


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    26   12:20am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    random "focus group". Paid $100 + a free subway sandwich. Thanks Howard Jarvis!

    I detest Howard Jarvis organization completely, but everyone has their price.

    I also think the unfunded liability issue for California is truly stupendously critical. The two pension funds need 5% REAL returns or things are going to get pretty sticky 10-20 years down the road.

    Fair enough. Unfunded liabilities are not helped by Bernanke. Neither are banks with no real interest profits. Neither are investors in bonds.

    Bernanke needs to throw main street a bone. That could be in the form of just slightly higher interest rates. Otherwise, people take risk and then Wall Street will crash the stock market yet again.

  27. bgamall4


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    27   12:27am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Entitlemented says

    Clinton alteration of CRA forced much more securitization.

    Rubins, an treasuring for Clinton and then moved on to CITI, and oversaw an exceleration of CDO by CITI.

    However, they needed Glass Stegal overturned, and the dems got this done by marching 30 Dems into the leading Republicans office when he did not want to undo Glass Stegal.

    So the liberals actually did the subprime mess, but the media does not bring this up.

    This is all a lie. Read Ritholz, read me. First, Glass-Steagall repeal and derivatives as gambling repeal were sponsored by the Gramms, Phil and Wendy, Republicans.

    The vote in the senate was along party lines, until the Republicans talked the Dems into going along. The vote was 90 to 8 for Glass-Steagall repeal. Barbara Boxer voted AGAINST repealing Glass-Steagall and you can't get more liberal than that.

    The CRA was only about 25 percent of subprime. The rest was bogus rated AAA private MBS. The CRA pulled back from origination when securitization took over. The Fed has a chart on it and it is found in my ebook, Ponzi Housing Scheme 21st Century. It is also found online.

    It is true that Citi got a waiver from Glass-Steagall in 1997. But what you need to know is that the toxic loans came from the UK, where they were called self certified loans. They were imported from the Square Mile, which never had Glass-Steagall like laws.

    So, it all came from the UK and Basil 2. The risk was mispriced, on purpose, because of a formula given to the central banks by an employee of JP Morgan. It was adopted and applied, circa 2003. Both parties were involved as Geithner allowed the bogus risk CDO's to be spread and Henry Paulson spread them like wildfire in 2004.

    So that is the story. The public guaranteed pools tried to catch up later, but the real bubble was private.

  28. Goran_K


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    28   11:02am Thu 29 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    bgamall4 says

    True, but then why do you support the greatest social engineer, Wall Street?

    Why do you keep insisting I'm a wall street shill?

    I simply don't want to fund old-timer retirement funds with my taxes. If anything that makes me a libertarian.

  29. Entitlemented


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    29   11:22am Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  
  30. bgamall4


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    30   7:31pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Ah, name calling when you can't make an intelligent counter-argument. Nice.

    I didn't name call. I asked him. You aren't reading carefully Alf.

  31. bgamall4


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    31   7:31pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    One is a state law and the other is a federal. The federal one ALSO covers pensions. Why is R-E-A-L-I-T-Y so difficult for you to accept?

    So you are rooting for Wall Street Alf?

  32. bgamall4


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    32   7:33pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Now, all you NON-Californians will be forking over dough to bail out California public workers.

    Much of California's taxes to the Federal Government goes to Red States. So a little payback would be just fine.

  33. bgamall4


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    33   7:34pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Bernanke shouldn't be throwing ANYONE a bone. He should only be limited to maintaining a sound money supply, that's it.

    The bone is slightly higher interest rates. That would mean less need for QE.

  34. bgamall4


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    34   7:35pm Thu 29 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    How is protecting one's investment and contractual rights constitute 'helping a lot of cities into ruin'. Answer: It doesn't. The idiots who took their funding from Wall Street did themselves in.

    No, the cities should walk away from the bogus Wall Street scams. And they should stop allowing Wall Street to advise them.

  35. taxee


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    35   2:21am Fri 30 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

  36. taxee


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    36   2:23am Fri 30 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

  37. bgamall4


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    37   8:34pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    Wall Street has NOTHING to do with the cities not bring able to make good on their pension promises.

    Yes, Wall Street is behind the plan to crowd out Calpers from the protection of state law.

  38. bgamall4


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    38   8:36pm Fri 30 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Melmakian says

    No they don't. Not when you factor in the ability of Californians deducting their state income taxes from their federal ones.

    According to charts, which are admittedly back in 2006 or so, you are incorrect.

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