Stringer, Burnett compete for NYC comptroller post

The race for New York City comptroller, a job that includes managing the $145 billion New York City Retirement Systems, is a study in contrasts as well as similarities between Republican John Burnett and Democrat Scott Stringer.

Despite their different backgrounds, Mr. Burnett and Mr. Stringer cite many of the same goals. Both want to reduce costs, bring some investment management in-house and streamline the city pension system, which is composed of five separate pension funds with a total of 58 trustees among them.

“They all have five separate redundant costs,” said Mr. Burnett, a political novice trying to become the first GOP comptroller since Joseph McGoldrick held the job between 1938 and 1945. “I think we can get scale and also reduce some of the fees that we pay if we aggregate all of the pension funds. It makes sense. The challenge is execution.”

Mr. Burnett said he is mindful of the failed attempt in 2011 and 2012 by Mayor Michael Bloomberg and Comptroller John C. Liu to consolidate the five funds into a single unit and reduce the number of trustees. The plan needed approval from the state Legislature, and opposition from many city unions, some of whose members are pension trustees, sank the proposal (Both Messrs. Bloomberg and Liu leave office at the end of the year).

“Based on my conversation with some of the union presidents, it (opposition) was more so over style — how it was presented,” Mr. Burnett said. “It was presented as 'my way or the highway' and that's not a good way to enter into a negotiation.”

Mr. Burnett said he would like to reduce the number of trustees. “But if that's a sore spot, then we can keep the same number as long as we can reduce the cost and the bureaucracy,” he said.

Mr. Stringer opposes the idea of a single pension fund. “I will sit with the 58 trustees to discuss what we can do to better, align the boards to work more closely together, to reduce the cost of operating the five funds,” he said.

He has been a trustee of one of the city pension funds, the New York City Employees' Retirement System, since be he became Manhattan borough president in 2006. Before that job, he was a state assemblyman for 13 years.

“The comptroller can't walk in and bang the table and say this is my plan,” he added. “I think the mayor learned that the hard way. I will look at what we can do together. We want to be efficient. We want to reduce costs.”

Mr. Stringer is considered the favorite in the Nov. 5 election thanks to voter registration in New York City favoring Democrats by a 6-1 margin. Mr. Burnett didn't face a primary challenge, but Mr. Stringer won a close primary victory — 52% to 48% —over Eliot Spitzer, a former governor and state attorney general.

Mr. Burnett was once a Democrat but switched his party allegiance in 2004 because his views changed as he learned more about the economy, taxation and investments, he said.

His full-time job now is full-time candidate. Over a period of 15 years, his financial services career includes jobs at Citigroup Smith Barney, Merrill Lynch and, most recently, the Platts unit of McGraw-Hill Financial. He has focused on risk and compliance issues. Mr. Burnett said his Wall Street experience should help him cut pension costs in part by bringing some investment management in-house — all is outsourced now — and in seeking greater competition and accountability among outside managers.

His first choice for internally managed investments would be fixed income securities because “fixed income is not as complicated as equities, or hedge funds or private equity,” he said.

If he cannot bring investment management in-house, “then I am going to make sure that we do not default automatically to Goldman Sachs, Morgan Stanley, the big name firms,” he said. “We will engage mid-level and smaller firms that are able and have a performance record of getting the same — if not better — returns. That will foster more competition.”

Mr. Burnett, like Mr. Stringer, acknowledges that bringing investment management in-house could be difficult because city salaries can't match the private sector.

“I am not sure of the staffing level that will be required,” Mr. Burnett said. “I don't see it being a lot of people. In a city of 8 million people, I think I can find a good half dozen that could manage the fixed income portion.”

Mr. Stringer declined to comment on specific asset categories to be managed internally. “The salaries, the number of people, the structure — all will be part of the transition” if he is elected, Mr. Stringer said. “We will look at other large institutional investors that have brought more asset management in house.”

Mr. Stringer said he would take the same approach of attracting employees to the comptroller's office as he has done with the Manhattan borough president's office.

“We had a very limited budget and a lot of big ideas and big plans for the office,” he said. “We couldn't compete salary-wise with the mayor's office or the council speaker's office or private industry. But we came to the office with a real plan; they liked the way we built the office.”

Neither candidate would comment on a specific strategy for asset allocation, although Mr. Stringer said he would create a job of chief risk officer.Mr. Burnett said he would not hire a chief investment officer to replace Lawrence Schloss, who left recently to become president of Angelo, Gordon & Co., New York, a manager specializing in real estate, credit and private equity.

“I am not going to hire a CIO; I am the CIO (because) the buck stops with me,” Mr. Burnett said. “The comptroller hiring a CIO is like the president of the United States getting elected and then hiring a commander-in-chief. It just doesn't make sense. I will have staff. They'll have certain issues that they will discuss with me. I make the decision.”