{"id":60930,"date":"2025-08-11T21:35:12","date_gmt":"2025-08-11T21:35:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/60930\/"},"modified":"2025-08-11T21:35:12","modified_gmt":"2025-08-11T21:35:12","slug":"zohran-mamdani-should-mobilize-nycs-pension-fund-leverage","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/60930\/","title":{"rendered":"Zohran Mamdani Should Mobilize NYC\u2019s Pension Fund Leverage"},"content":{"rendered":"

Zohran Mamdani\u2019s victory in the Democratic primary for New York\u2019s mayoral election set off a panic in the city\u2019s financial services industry. Wall Street players have been threatening to relocate<\/a> to Texas or Florida and promising to funnel<\/a> hundreds of millions of dollars into his opponents\u2019 campaigns. JPMorgan Chase CEO Jamie Dimon got on his soapbox recently to brand Mamdani \u201cmore a Marxist than a socialist<\/a>.\u201d<\/p>\n

In reality, the hostile reaction to Mamdani\u2019s policy platform merely shows how Wall Street depicts even social democratic proposals as a plan for full-blown revolution. It\u2019s no surprise that Donald Trump draws significant support and funding from this constituency. Senior executives from the worlds of private equity, hedge funds, and asset management strongly backed Trump in 2024 and contributed millions to his record-breaking inaugural fund<\/a> this past January.<\/p>\n

Despite the financier meltdown in response to Mamdani\u2019s election, the unfortunate truth is that the mayor\u2019s office in New York has little jurisdiction to regulate the unwieldly nerve center of the global financial system that operates from Manhattan\u2019s southern tip. However, Mamdani and other elected officials are by no means powerless against big finance. Their power arises from their roles in overseeing the New York City retirement systems (NYCRS) \u2014 a significant source of capital for New York\u2019s financial services sector.<\/p>\n

If elected, the Democratic Party slate would control the city\u2019s retirement systems, comprising five pension funds and covering the city\u2019s municipal employees, police officers, firefighters, teachers, and other public school employees. In total, the pension funds cover roughly 870,000 current and former New Yorkers<\/a>, half of whom are retired.<\/p>\n

Altogether, the pooled pension system has approximately $280 billion worth of assets under management. This makes it the United States\u2019 fourth-largest public pension plan and one of the world\u2019s foremost institutional investors.<\/p>\n

Each pension fund is financially independent and governed by its own board of trustees. The comptroller, currently Brad Lander, sits on each board and provides investment advice, while his Bureau of Asset Management oversees each fund\u2019s investment portfolio. Mark Levine is the Democratic nominee for City Comptroller and will take office in November if elected.<\/p>\n

Zohran Mamdani\u2019s victory in the Democratic primary for New York\u2019s mayoral election set off a panic in the city\u2019s financial services industry.<\/p>\n

Levine won his race against progressive Justin Brannan, who was endorsed by Bernie Sanders and the Working Families Party. That said, Politico\u2019s Joe Anuta reported<\/a> that Levine and Brannan had \u201cstrikingly similar platforms and political proclivities,\u201d both having staked their campaigns on challenging Trump\u2019s attacks on New York City.<\/p>\n

Mamdani will nominate a representative to each pension fund\u2019s board of trustees should he be elected in November. Under the leadership of Mamdani, along with figures like Levine and Public Advocate Jumaane Williams who already sit on the board of New York City Employees\u2019 Retirement System, there is a substantial opportunity to shift the balance of power in the city away from Wall Street.<\/p>\n

To understand that opportunity, we need to first examine the pension system in its current form. New York City\u2019s public school teachers and staff, firefighters, police officers, and municipal employees contribute to their pension pots, with additional contributions made by their respective employers.<\/p>\n

These pools of capital are then committed predominantly to external investment managers, who operate investment funds in public and private capital markets. Most of the NYCRS\u2019s investments<\/a> lie in US-listed stocks and low-risk bonds, with additional commitments to private equity, real estate, hedge funds, and infrastructure.<\/p>\n

Blackstone CEO Stephen Schwarzman can bring home a billion dollars in compensation in a single year alone.<\/p>\n

External investment managers are the linchpins of the entire investment arrangement. They act as mediators between pension funds, sovereign wealth funds, university endowments, and insurance companies on the one hand, and the multimillion-dollar investments that structure the modern world on the other. After a dramatic rise since the 2008 crisis, traditional asset managers like BlackRock, State Street, and Vanguard now rule stock exchanges globally<\/a>, while \u201calternative\u201d asset managers like Blackstone, Apollo Global Management, and KKR oversee<\/a> significant swathes of key social assets like housing, energy, and transportation.<\/p>\n

The asset management model involves payment of two types of fees for the investment services provided to pension funds and other institutional investors. Performance fees are paid according to the return generated at the end of the investment cycle, while management fees are paid throughout the duration of the investment period for the asset manager\u2019s services.<\/p>\n

These fees have resulted in senior executives from the asset management world becoming some of the highest-paid individuals on Wall Street. Blackstone CEO Stephen Schwarzman can bring home a billion dollars in compensation<\/a> in a single year alone.<\/p>\n

While the external investment management model, with management of assets outsourced to third-party firms, is presently the dominant form, its positive reputation among pension funds is waning. As the Financial Times reported<\/a> in July, the University of California\u2019s endowment and pension fund decided to divest from hedge funds after their managers failed to sufficiently safeguard their investments.<\/p>\n

The chief investment officer lambasted the industry at large: \u201cHedge funds are a fantastic business if you\u2019re on Wall Street, and you can charge a great fee and then you can afford to buy all the art and the private jets and the amazing houses in the world.\u201d<\/p>\n

The massive financial leakages in the form of fee payment represent one concern, but there is also the lack of transparency in investment management. For example, California mega pension funds CalPERS and CalSTRS took Blackstone to task<\/a> in 2023 after a portfolio company owned by the Wall Street behemoth was implicated in a child labor scandal.<\/p>\n

A thirteen-year-old Guatemalan girl in Nebraska, who was working for the Blackstone-owned company, came to school with chemical burns<\/a>. This led to the discovery of more than one hundred children employed as nighttime sanitation workers in slaughterhouses across eight states. A CalPERS board member<\/a> pushed the pension fund to reconsider its future commitments to Blackstone and to demand greater clarity on the impacts of their investment, underscoring the importance of such roles in the NYCRS.<\/p>\n

There is another good reason for New York City\u2019s elected officials to undertake a step change in protocol: the money they commit to external investors is being used to provide the Trump administration with critical support and resourcing. Marc Rowan, Apollo\u2019s CEO, gave millions<\/a> to Trump and other Republicans during the 2024 election cycle, and has voiced his support for the president\u2019s attacks on universities. At one point, Rowan was tipped to be the front-runner<\/a> for the position of Treasury secretary in Trump\u2019s cabinet.<\/p>\n

Apollo oversees $2.4 billion<\/a> of NYCRS\u2019s assets, charging the five pension funds for the investment service that helps generate Rowan\u2019s enormous personal wealth. Similarly, Blackstone manages $1.6 billion<\/a> of NYCRS assets, and CEO Schwarzman gave tens of millions<\/a> to Trump and other Republican candidates last year. Antonio Gracias, the founder and CEO of Valor Equity Partners, helped<\/a> Elon Musk lead the Department of Government Efficiency (DOGE) while his firm oversees $500 million<\/a> in investments from New York City\u2019s public sector employees.<\/p>\n

Under the lead of Levine and Mamdani-appointed representatives, the NYCRS should look to model itself after Canada\u2019s largest public pension funds, known collectively as the \u201cMaple 8.\u201d The Canadian model is unique in bringing investment management expertise in-house, as opposed to handing responsibility (and payment of massive fees) to external asset managers.<\/p>\n

The money New York\u2019s pension funds commit to external investors is being used to provide the Trump administration with critical support.<\/p>\n

This approach cuts into the sector\u2019s grotesquely inflated bonuses and its financial support for right-wing politics. Following Canada\u2019s example in New York would have the added bonus of not requiring Governor Kathy Hochul\u2019s approval, unlike<\/a> Mamdani\u2019s fiscal policy changes and need for increased state funding.<\/p>\n

However, the NYCRS should diverge from the Maple 8 in its approach to investment. This would mean moving away from an extractive model that displaces<\/a> low-income tenants at home in Toronto, or contributes to failing infrastructure and rising utility bills for customers overseas<\/a>.<\/p>\n

The critical capacity of New York\u2019s public pension funds should instead be used to deliver on long-term investment in local, low-carbon infrastructure that improves the lives of New Yorkers. Such investments could support wind farms off the coast of the Rockaways<\/a>, heat pumps for those who can\u2019t escape to the Hamptons for the summer, or electric vehicle plants in deindustrialized neighborhoods in the Bronx and Queens.<\/p>\n

As the think tank Common Wealth has argued<\/a>, progressive pension reform makes it possible to create \u201ca win-win system where patient investment in a healthy, and sustainable economy is coupled with financially secure and dignified retirement for all.\u201d Recent moves from Comptroller Lander have shown this is already feasible. The New York City Employee\u2019s Retirement System stepped in<\/a> to save 35,000 rent-stabilized homes and keep them affordable after the lender for the apartment buildings went bust.<\/p>\n

Why shouldn\u2019t our pension wealth be mobilized to deliver for the social good? As economist Grace Blakeley points out in her book Vulture Capitalism<\/a>: \u201cBlackRock\u2019s money doesn\u2019t really belong to BlackRock; it belongs to us. Yet that money is being used to augment the power and wealth of those at the top at the expense of everyone else.\u201d<\/p>\n

Despite the fact that the NYCRS is one of the largest pooled pension funds in the country, the direct implications of divestment on the resourcing of Wall Street\u2019s operations are admittedly limited. However, New York\u2019s public pension funds can provide an exemplary case study for other funds across the country frustrated with the fee structure and the moral nihilism of asset managers. Mamdani and the progressive slate standing in November\u2019s election have a vital opportunity to deliver on this front for ordinary New Yorkers while simultaneously pushing back against Wall Street and Trump.<\/p>\n","protected":false},"excerpt":{"rendered":"Zohran Mamdani\u2019s victory in the Democratic primary for New York\u2019s mayoral election set off a panic in the…\n","protected":false},"author":2,"featured_media":60931,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,99,186,184,185],"class_list":{"0":"post-60930","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-finance","12":"tag-personal-finance","13":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/60930","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=60930"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/60930\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/60931"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=60930"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=60930"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=60930"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}