Investment Firms Make Money the Old-Fashioned Way: They Bribe People

USA Today had a nice piece this morning reviewing an interesting habit of investment management firms, of contributing large amounts of money to elected state officials who have control over the investment of pension fund money. For those trivia fans out there, yes, well-known billionaire and Social Security foe Peter Peterson is on the list of big givers.

--Dean baker

http://prospect.org/csnc/blogs/beat_the_press_archive?month=08&year=2009&base_name=investment_firms_make_money_th

UT piece:

Do campaign contributions help win pension fund deals?

More than two dozen firms that have surfaced in a broad corruption investigation of public pension funds gave at least $1.97 million in campaign contributions to officials with potential influence over the funds' investments, a USA TODAY analysis shows...

Several of the firms won pension investment work after they, their executives or hired intermediaries gave contributions. The awards generate lucrative fees and lend prestige that could help lure new clients...

The probes come as pension funds have increasingly invested more of their $2.2 trillion in assets with private-equity firms and hedge funds as they seek returns that outpace the stock market. The interest has been reciprocated, as the private firms vie for the fees involved...

Officials of the Blackstone Group have similarly contributed to pension fund incumbents and candidates. The firm's chairman is co-founder Stephen Schwarzman, a former Lehman Bros. executive. Co-founder Peter Peterson retired as Blackstone's senior chairman in 2008...

Blackstone has received about $1.74 billion in private equity- and real estate-related investments from the New York pension fund since 1993 and has been paid about $20 million in fees, said Whalen, the state comptroller's spokesman...

http://www.usatoday.com/money/perfi/funds/2009-08-26-pension-fund-political-donations_N.htm