To Pay New York Pension Fund, Cities Borrow From It First

How can you borrow from Peter to pay Paul? Ask NYC officials. They are probably getting their advice from Wall Street who actually control the money. Queenbee.

ALBANY — When New York State officials agreed to allow local governments to use an unusual borrowing plan to put off a portion of their pension obligations, fiscal watchdogs scoffed at the arrangement, calling it irresponsible and unwise.

And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.

The eagerness to borrow demonstrates that many major municipalities are struggling to meet their pension obligations, which have risen partly because of generous retirement packages for public employees, and partly because turbulence in the stock market has slowed the pension fund’s growth.

The state’s borrowing plan allows public employers to reduce their pension contributions in the short term in exchange for higher payments over the long term. Public pension funds around the country assume a certain rate of return every year and, despite the market gains over the last few years, are still straining to make up for steep investment losses incurred in the 2008 financial crisis, requiring governments to contribute more to keep pension systems afloat.

Supporters argue that the borrowing plan makes it possible for governments in New York to “smooth” their annual pension contributions to get through this prolonged period of market volatility.

http://www.nytimes.com/2012/02/28/nyregion/to-pay-new-york-pension-fund-cities-borrow-from-it-first.html?_r=1&ref=todayspaper

Goldman Traders Lost Money on 17 Days in Q4

Goldman Sachs Group Inc. (GS), the Wall Street bank that generated 60 percent of its 2011 revenue from trading, recorded losses from that business on 17 days in the fourth quarter, down from 21 days in the prior quarter.

The firm’s traders lost more than $100 million on two of those days, according to the New York-based company’s annual filing with the Securities and Exchange Commission. They produced more than $100 million on nine out of 63 total days in the quarter that ended Dec. 31, the filing showed.

Goldman Sachs, the fifth-biggest U.S. bank by assets, had trading losses on 54 days during 2011, the highest full-year total since 2008 and more than double last year’s number. Trading revenue fell 21 percent in 2011, contributing to a 47 percent drop in net earnings from a year earlier.

Morgan Stanley, the sixth-biggest U.S. bank by assets, said this week that its traders lost money on 22 days during the quarter and on 64 days in all of 2011.

Goldman Sachs’s traders lost money on 21 days during the third quarter, 15 days in the second quarter and one day in the first quarter, according to company reports. Goldman Sachs recorded zero trading losses in the first quarter of 2010, the only perfect quarter in the firm’s history.

http://www.bloomberg.com/news/2012-02-28/goldman-s-traders-lost-money-on-17-days-in-fourth-quarter-down-from-21.html