Wall Street Smells UAW VEBA Blood in the Water
Because health care VEBAs normally contains less than $1b in assets, they're usually nothing more than a sideline for sleepy old pension fund managers. But, as Bloomberg reports, a VEBA the size of the one The Big 2.8 have agreed to bestow upon the United Auto Workers (UAW) is a whole 'nother kettle of fish. At $54.4b, it's plenty big enough to catch the [cold, dead] eye of the big boys like JP Morgan Chase & Co., State Street and Merrill Lynch. According to trade publication Pensions and Investments, this health care fund is the same size as the University of California's pension fund endowment– which is the nation's 25th largest. UAW president, Ron Gettlefinger says his organization has been "inundated" with offers from Wall Street to manage the trust. And why not? Independent investment consultant Geoff Brobroff estimates the fees for managing the VEBA could total $285 million (not including kickbacks). Nice work if you can get it.
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The buzzards are circling...
"Geoff Brobroff estimates the fees for managing the VEBA could total $285 million (not including kickbacks)" per year!
Anyone who takes the job of managing that money had better know they are going to die of a fatal disease before they get sued or even thrown in jail. Likely, someone will get the business for a firm, take the money, and run like hell to distance themselves from what will surely end in a federal inquiry or the mother of all tort cases. Not to mention death threats from the members whenever an investment goes bad.
For a historic overview of the dilemma of organized labor from conservative retired activist union rebels see... http://michaelwestfall.tripod.com/id50.html