A big story that got a little lost in all the earnings and healthcare headlines this week comes to us out of California. The California Public Employees’ Retirement System (aka CalPERS) - the nation’s largest pension fund - is suing Wall Street’s top three credit rating agencies.
I saw this last night and thought, “Is this the same CalPERS that invested in a real estate development project that they were forced to abandon and lost more than 100% of their investment?” Because, I’m pretty sure they know nothing about estimating risk themselves. The CalPERS pension managers, who made huge salaries and bonuses, actually have a strong case that they were financially unsophisticated and that the ratings agencies took advantage of them. They just need to point to the crap they invested in that wasn’t rated by the agencies and say, “SEE? We don’t know what the heck we’re doing!”
