COVER less money. During up years would we make a little less? Perhaps. But at the same point, then, we also would lose less. I think it was a very balanced approach.” Records show that in Thompson’s last four years as comptroller, pension investment expenses totaled more than $1.2 billion dollars, compared to only $500 million in his first four years. Despite the significant increase in spending on fees, total assets for the three funds went from $88 billion in 2006 to $82 billion in 2010. A New York Times report also found that four out of five city pensions performed below the median for similar public pensions nationally and the city’s largest fund did worse than two-thirds of large public pension funds, even as the number of money managers who worked with the comptroller tripled. Throughout his tenure, Thompson was lauded for
increased the number of audits in his first two years to 90 and 92, despite a budget cut in 2011. Without getting into specifics, Thompson said that he directed his office to conduct audits that were more in-depth and strategically targeted, and also implied that his budget was tight. “You’re dealing with budget squeezes, but what you tried to do was look at audits that went a little more in-depth, try to focus on audits that would generate revenue or audits that would find savings within the city budget, so that was more or less intentional,” Thompson said. Thompson delegated many of his responsibilities to his top political aides, Deputy Comptroller for External Affairs Eduardo Castell and Deputy Comptroller Gayle Horwitz, who had little experience with finance. Horwitz
political calculus because of his mayoral ambitions, and partly because of the faith he put in Bloomberg and his budget team. “To have not challenged the mayor…there was a political reason for that. I was running for mayor, and obviously would have [challenged him] if there were the proper signals that showed there was something going on. I would have challenged him at least publicly,” Thompson said. “It came up repeatedly, [and] they continue[d] to make assurances based on the expansion of the [CityTime] project, based on the number of agencies that continued to grow from the original scope, as to reasons why there was an expansion in spending.” When Bloomberg decided to seek a third term in 2009 after the market took a nosedive and convinced the City Council to reverse term limits, Thompson emerged as the
“It’s not a question of forging relationships. People are supporting me in a number of different communities across the board, because they believe I’m the best person to get the job done.”
increasing investments in underserved neighborhoods and in minority and women-owned businesses, but some of those investments were in firms that sold subprime mortgages. Thompson also instituted a transition from investing in public equities toward private equities and real estate funds. Indeed, the biggest increase in spending under Thompson was for private equity firms. Private equity costs were $5 million the year before Thompson took over as comptroller, compared to $87 million in his last year. By contrast, when John Liu took over as Comptroller, he cut investment spending by more than $30 million in his first year in office and more than $45 million in the second, even as the fund grew from $35 billion to $42 billion. Thompson also used the power of the audit sparingly. In his last four full years as comptroller when his office budget averaged $58 million per year, Thompson did a total of 310 audits. His predecessor, Alan Hevesi, conducted almost twice as many audits—606—in his last four full years with a smaller budget of about $48.7 million a year. In Thompson’s last full year in office, he completed only 69 audits. By contrast, Hevesi put out 157 in his final year. Thompson’s successor, John Liu, 12
SEPTEMBER 9, 2013 | cityandstateny.com
in turn delegated many of her responsibilities, according to the former comptroller’s office employee. “[Horwitz] didn’t have a background in any kind of management,” the source said. “She was way in over her head. She had a remote management system. She had favorites; she managed her favorites. Between the two of them, it wasn’t an effective agency.” When real scandals struck the comptroller’s office— including a $500 million boondoggle involving the city’s computerized payroll system known as CityTime— Thompson and his deputies did little to monitor contracts and fix what went wrong. One source said Bloomberg told him to lay off probing CityTime, and he did. “They were at the table but they didn’t exercise that role,” another source said. “[Horwitz] removed herself from what was going on there. She didn’t like to get involved in controversy. Bill let her delegate. They should have been on CityTime way before that happened. When overruns were happening, they were in there and yet they did nothing. I don’t think she was equipped to do what she was doing.” Thompson acknowledged that he failed to flag the contract. His reason for not doing so, he said, was part
only leading Democrat to challenge him. Owing to his success in diversifying the city’s pension funds Thompson tapped a deep well of investors that would amplify his donor base in future elections. Thompson had been able to raise $500,000 in political contributions from money managers since he first ran for comptroller in 2001, according to a 2009 Times report. But his efforts were for naught. Bloomberg campaigned aggressively and outspent Thompson by a 14-to-1 margin. Thompson finished strong, closing Bloomberg’s double-digit lead in the polls ultimately to a 4.6 percent margin, but he received criticism in the press for his effort. One anecdote from the 2009 campaign stands out. Bloomberg canvassers reportedly knocked on Thompson’s home in Harlem on a weekday afternoon in the final weeks of the campaign by mistake. Thompson answered the door himself.
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hompson’s cozy ties with the financial sector as comptroller helped him land a gig with Siebert Branford Shank—a Wall Street firm and one of the leading underwriters of city bonds. The firm had raked