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Caprio returns fire at Laffey, defends pension fund performance

 

In a campaign-worthy performance, General Treasurer Frank Caprio this morning rebutted Steve Laffey's recent criticism of him and his management of Rhode Island's state pension fund, signaling the continued opening shots of the 2010 gubernatorial race.

Comparing the performance of RI's pension fund with its counterpart in Massachusetts doesn't make sense, Caprio said during a taping this morning of WPRI/WNAC-TV's Newsmakers, since Rhode Island doesn't invest in hedge funds, and since the impact of the Bay State's considerable hedge fund investment won't be known for months.

A letter to the editor in yesterday's ProJo, from a Cranstonian, btw, echoed Laffey's criticism of Caprio last week on Newsmakers.

A deeper analysis would reveal that the S&P 500 is not a proper benchmark. The S&P is an index of stock values. The state pension fund consists of a mixture of stocks, bonds and cash, not only disqualifying the S&P as a fair comparison but further revealing that the state’s stock portfolio and general treasurer are performing even worse. In fact, based on data in the article, if we had simply outsourced our pension plan to Massachusetts, instead of letting General Treasurer Frank Caprio lose $2.1 billion, we would have saved nearly $850 million.

Caprio, however, noting how the pension fund suffered significant losses during market downturns in 1987 and the more recent dot.com bust, said the fund has also reaped the benefit of pursuing a long-term strategy. If it didn't remain invested, the fund's subsequent big gains would have never been realized, he said.

While Laffey rapped Caprio as basically a single-practitioner lawyer running a state pension fund, Caprio noted how a board, half of whose members are appointed by him, and half by the governor, oversees it.

The treasurer, exuding a warm persona, downplayed the criticism from Laffey, saying that the two talk on occasion and have different leadership styles.

But Caprio demonstrated his game when he slammed down his keys on the coffeetable at the centerpiece of the Newsmakers' set, describing how he declined to take a state car when he started in the treasurer's office.

Caprio, who attended Governor Carcieri's economic conference yesterday, called for a more competitive tax structure to improve Rhode Island's economic climate. While decidely bipartisan in assessing how less than a handful of legislators attended the conference, the former Senate Finance chair said the General Assembly should immediately return to the State House to focus on the state's economic woes.

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