Wednesday, September 24, 2014

Run The Treasurer's Office Differently How, Mike Frerichs?

In a Daily Herald piece that ran yesterday, Mike Frerichs' campaign manager Zach Koutsky spouted off a statement about how Mike Frerichs is going to 'run the treasurer's office differently."  You can see the blurb right here.

Over on Reboot Illinois, we can start to find out what 'differently' means to Mike Frerichs as it relates to the Illinois Treasurer's office. anyone's definition, Mike Frerichs saying he wants to run things differently would be a terrible mistake that would impact every taxpayer in Illinois.

For instance...the job of the Treasurer is to secure the best returns for taxpayers while minimizing risk.  But...what does Mike Frerichs think?  How's he thinking 'differently'?
For the past five months, Senator Frerichs has sharply criticized the current Treasurer’s strategy of investing in instruments outside of Illinois, including U.S. Treasury Bonds, Israeli bonds, Federal Home Bank Notes and commercial paper from U.S. entity banks. In fact, Frerichs went so far as to write that the “current Republican treasurer has placed a premium on investments outside of Illinois and the U.S., over the benefits that can be gained from investing in our people, our infrastructure and our businesses,” in a Daily Herald questionnaire the newspaper published February 14th. 
The current diversified, global investment strategy has allowed the Treasurer’s office to achieve returns significantly above industry benchmarks, while also ensuring safety and liquidity. Not an easy task. Yet, the Senator continues on with his stinging criticisms, criticisms based on rhetoric instead of results. 
The simple fact is that Senator Frerichs’ criticism demonstrates a myopic view of investment that may sound good in political speeches, but is anything but financially sound.
But...let's just say we go along with Mike Frerichs and his "different" approach. What would happen under Mike Frerichs' watch for Illinois?
First, Illinois would divest itself of Israel bonds, even though they have a higher yield than both U.S. Treasury bonds and other foreign bond offerings. In addition, Israel has never missed a payment or defaulted. Secondly, Illinois would retreat from most of its commercial paper and U.S. Treasury Bonds and Agency bonds. In short, nearly 80 percent of its current portfolio, one that is beating industry benchmarks, would be reallocated to Illinois state bonds and Illinois agency bonds.
Doesn't seem like you could find anyone - anywhere - that has a background in investing that would tell their client to follow Mike Frerichs' 'different' approach that limits investment to one area?

But it gets worse when it comes to how 'different' Mike Frerichs would run the Treasurer's office.

Mike Frerichs also wants to be an 'activist-investor' that supports and rewards his own pet issues and projects.  That's 'different' isn't it?  What would that mean for all of us taxpayers?
The Treasurer of Illinois is responsible for over $17 billion worth of investments and the very last thing taxpayers can afford is an ill-conceived political agenda driving our investment strategy.
Illinois can't afford Mike Frerichs to run the Treasurer's office 'differently'.  Illinois can't afford Mike Frerichs.   
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