Comptroller Sees ‘Trying Times,’ But Is Bullish on Pension Fund
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Comptroller William Thompson Jr. is assuring New Yorkers that the city’s pension system will withstand the mayhem that has struck the financial sector.
Only about two-tenths of a percent of the pension fund is invested in Lehman Brothers, Merrill Lynch, and American International Group, the three powerhouses that were most affected by the mortgage crisis this week. Still, he is warning that the $110 billion pension fund will probably shrink due to dismal economic conditions.
“New York City funds are healthy, and we are ready for the trying times that are no doubt ahead,” he said yesterday during a speech at New York University. “We’re better prepared to deal with the downturn than ever before.”
Mr. Thompson, who is expected to run for mayor in 2009, had been slated to address workforce development, but he changed topics following two tumultuous days that featured the bankruptcy of Lehman, the sale of Merrill Lynch, and the federal government’s takeover of the giant insurer AIG.
New York’s revenues will suffer due to damage in the financial sector, which accounts for nearly half of the city’s business income, the comptroller said. His office had predicted a loss of 25,000 finance jobs, but that was before the events of this week.
As a result, he noted, the government may not have the luxury of extending property tax cuts that New Yorkers have enjoyed the past few years.
While Mr. Thompson blamed players at all levels of the public and private sectors for the crisis, he warned against responding with excessive regulation.
“I’d be careful about overregulation,” he said, noting that some businesses have declined to go public in America due to tough legislation passed after the Enron scandal. “I think what we have seen is a lack of transparency, not regulation.”
Mr. Thompson has emphasized accountability during his tenure as comptroller, a position that involves auditing city agencies.
Some of his more scathing criticism yesterday was directed at the Department of Education, which he said has essentially hidden its budget from the public. Mr. Thompson said he would like to see that changed if the state Legislature reauthorizes mayoral control of the school system next year, a move that he supports.