Why Corzine, Kramer and Clark Should Resign

Governor Jon Corzine, bureaucrat William G. Clark, and Orin Kramer, Chairman of the New Jersey's Investment Council, have completely let the people of the state down. Their failure to firmly grasp the fact that the state's pension plans hold the money of the people and are not a tool for political advancement is beyond comprehension.

According to the website of the state Treasury Department's Division of Investment, headed by Mr. Clark, the pension plan is among the 10 largest in the United States and provides more than 700,000 current and future retirees in seven public systems with retirement benefits. Simply put, the system is a behemoth that seems to be managed with little if any regard for those who are counting on it for the future.

In early June last year during the height of the credit crisis, the pension system invested $180 million in Lehman Brothers preferred and common stock. In a statement, the Division of Investment said the move "was intended to improve investment performance of [its] financial services equity portfolio over time." Time, it seems, was not on its side and when Lehman filed for bankruptcy in early September, the investment was marked to zero: The state lost it all.

On St. Patrick's Day, the state Attorney General, on behalf of the Division of Investment, filed suit against Lehman, its former board, and its executives, citing fraud and misrepresentations surrounding the investment. Governor Corzine issued a statement saying that he hoped the suit would recover compensatory and punitive damages.

My question is: Do pension plan recipients and New Jersey taxpayers have the right to sue to recover the more then $30 billion lost to the pension fund over the last year due to bad guesses by the Division of Investment? Furthermore, the idea that the powers-that-be would have the audacity to say that had they not been running the plan, things would have been worse is to me is nothing but grandstanding on the backs of many people's futures.

I believe that Messrs. Corzine, Clark, and Kramer should resign. These three feckless individuals need to stand up and take responsibility for their actions. There are many dedicated state employees who work hard day-in and day-out to provide critical services to the state and its residents, who in turn work hard to pay their taxes to cover the costs of those services. Yet the people in charge seem to have no idea about what to do with the money.

The Governor's answer is to raise taxes. Does anyone really believe that will work? Furthermore, why should the taxpayers be forced to pay for the fiscal mismanagement of their so-called leaders?

Leaders make a promise - to lead - and there is clearly a lack of leadership in Trenton right now and it is time for a change.

Another promise is made in the contracts between the state and those entitled to a pension. It is not right that the Governor and the Division of Investment seem not to be willing to honor this promise or do not take their responsibility seriously enough to make sure that pension assets are protected. They have to start acting appropriately with the money. If they don't, the state and its residents will be faced with fiscal Armageddon.

Recently Mr. Corzine, who is said to have a background in finance, seems to have completely taken his eye off the ball and decided to pass the buck. In his recent budget address he said, "We must not - and we will not - balance this budget on the backs of the people, who through little or no fault of their own have been caught in the rip-tide of the economic tsunami." If it is not the people's fault, then whose is it?

The reason we are in this mess is because of our inability to elect leaders who know how to lead. It is our fault that we did not see that he is incapable of providing leadership and is unable to manage the state. His solution, you may have noticed, is to raise taxes - did I miss something or is he trying to balance the budget on the backs of the people?

It is time for Mr. Corzine to act responsibility and it is time for Mr. Clark and Mr. Kramer to take responsibility for their mistakes. All three need to resign.

New Jersey needs public servants who can deliver for the public good, not people who hide behind their alleged financial prowess. We are better than that.

Daniel Strachman is an author of a number of books on investment strategy including Getting Started In Hedge Funds (Wiley 2005) The Fundamentals of Hedge Fund Management (Wiley 2007) and Essential Stock Picking Strategies (Wiley 2002). He is also a member of The Fanwood Rescue Squad, a taxpayer in NJ and blogs at www.hedgeanswers.com