Ancram, N.Y.: I was shocked to read Tom DiNapoli (photo) call himself a progressive in his bid to win reelection as state comptroller (“Earning a new term as N.Y. comptroller,” op-ed, June 7). Progressives don’t support genocide, and New York State employees shouldn’t want their pensions invested in it. Aside from the obvious moral objections to his investing in Israel Bonds, it doesn’t make fiscal sense.
From Drew Warshaw’s research (to whose candidacy I’m not committed): “It turns out, the government of Israel actually issues two types of bonds. The first are traditional sovereign bonds and can be freely traded between investors on ‘secondary’ markets. These bonds comprise 10% of our pension fund’s holdings. The second type, which represents 90% of our pension fund’s holdings, cannot be traded without the express permission of Israel’s government and thus must be held to maturity. This second type of sovereign bond is nearly unheard of in capital markets because the credit risk an investor takes on is total. If Israel’s finances begin to erode, if its credit rating falls, or if New York’s pension fund simply needs to raise cash to pay beneficiaries, unlike similarly-rated bonds from Ireland, Japan, Spain and the like, there is no getting out of this position. New York is stuck.
“Is it possible that New York taxpayers are compensated for this unique risk? Is the return on this special class of bonds so enticing that it is worth owning such a disproportionate amount? Not even close.”
Dave Hall