Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54 Page 55 Page 56 Page 57 Page 58 Page 59 Page 60 Page 61 Page 62 Page 63 Page 64 Page 65 Page 66 Page 67 Page 68 Page 69 Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 Page 78 Page 79 Page 8014 small business and farms would result in a much healthier economy and much more broad-based support for democratic institutions. We were blessed with an advisory board of very capable and committed pension fund leaders. In April 1997, we had an advisory board meeting at Safeguard Scientifics where the board chair led a venture capital effort. I gave a presentation on the extraordinary waste in the federal bud- get. As an example, we demonstrated why we estimated that the prior year federal investment in the Philadelphia, Pennsylvania, area had a negative return on investment. It was, however, possible to finance places with private equity and then reengineer the government investment to a positive return and, as a result, generate significant capital gains. Hence, it was possible to use U.S. pension funds to increase retirees’ retirement security significantly by investing in American communities, small businesses, and farms — all in a manner that would reduce debt and improve skills and job creation. This access was important inasmuch as one of the chief financial concerns in America at that time was ensuring that our retirement plans performed financially to a standard that would meet the needs of beneficiaries and retirees. It was also critical to reduce debt and create new jobs as we continued to move manufacturing and other employment abroad. If not, we would be using our workforce’s retirement savings to finance moving their jobs and their children’s jobs abroad. The response from the pension fund investors was quite positive until the President of the CalPERs pension fund — the largest in the country — said, “You don’t understand. It’s too late. They have given up on the country. They are moving all the money out in the fall (of 1997). They are moving it to Asia.” He did not say who “they” were, but he did indicate that it was urgent that I see Nick Brady — as if our data that indicated that there was hope for the country might make a difference. I thought at the time that he meant the pension funds and other institutional investors would be shifting a much higher portion of their investment portfo- lios to emerging markets. I was naive. He was referring to something much more significant. The federal fiscal year starts on October 1st of each year. Typically the appropriation com- mittees in the House and Senate vote out their recommendations during the summer. When they return from vacation after Labor Day, the various committees reconcile and a final bill is passed in September. Reconciling all the vari- ous issues is a bit like pushing a pig through a snake. Finalizing the budget each fall can make for tenseness. When the new bill goes into effect, new policies start to emerge as the money to back them starts to flow. October 1st is always a time of new shifts and beginnings. In October 1997, the federal fiscal year started. It was the begin- ning of at least $4 trillion going missing from federal government agency accounts between October 1997 and September 2001. The lion’s share of the missing money disappeared from the Department of Defense accounts. HUD also had significant amounts missing. According to HUD OIG reports, HUD had “undocumentable ad- justments” of $17 billion in fiscal year 1998, and $59 billion in 1999. The HUD OIG re- fused to finalize audited financial statements in fiscal year 1999, refused to find out the basis of the undocumentable adjustments or to get the money back and refused to disclose the amount of undocumentable adjustments in subsequent fiscal years.[84] The HUD OIG continued to invest significant resources in persecuting Hamilton during this time. – From “Financial Coup d’Etat,” Dillon Read & Co Inc. and the Aristocracy of Stock Profits This discrepancy, of course, raises the questions why a pension fund such as CalPERS – one of the largest in the world – continued to buy sig- nificant amounts of US mortgage securities if its president knew a “financial coup d’etat” and housing bubble were underway. If central control mechanisms are overriding fiduciary law on this scale, how can socially responsible investment make a difference? I. Investment Screening: Can We Filter for Productive Comapnies?