Crime pays, at least that is what trustees of the $11.6 billion Illinois State Universities Retirement System, Champaign, are hoping in the Public-Private Investment Program.
“This is a crime the government is going to allow these guys to make this kind of money,” said Steven Rogers, trustee, referring to money managers investing in troubled mortgage securities under the Treasury Department-sponsored program. “We (would) benefit from it as a result of investing in it. ... You put up 25% (and) we get 50% of profit. That's a damn good deal ... And then to buy these things at depressed prices ... you almost (couldn't) lose on this.”
“I think there are some troubling aspects getting in bed with this deal, but we just have to get comfortable with that,” Mr. Rogers added.
Mr. Rogers made his comments during a discussion Sept. 10 by trustees on whether to search for managers to invest potentially $125 million in the government program.
Trustee Mitchell Vogel questioned the public policy perspective of the PPIP. “Instead of helping people with mortgages, the government is going to take mortgages and let banks (sell) off something they are calling toxic,” he said.
“It seems like a good deal for us,” Mr. Vogel said. But “there is no guarantee (the) money banks are going to get is going to be turned into (new) mortgages ... It could be invested in other areas.”
Trustees unanimously approved the search. — Barry B. Burr