Audit Notes: Pretty Pensions, Private Equity Walks, Payday Lenders Skate

Kudos to the Times’s Mary Williams Walsh and Amy Schoenfeld for a corker of an exposé on six-figure pensions larding up New York State’s public employee pension system.

The lead is pretty strong:

In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year.

And the Times should be commended for its decision to name names—publishing the names and affiliations of the 3,726 top pensioners, starting, wisely, with the highest earner on the first page of the interactive graphic. Naming thousands of rank-and-file pensioners, as opposed to political leaders, may have given editors pause (it’s not unheard-of, but still unusual) but the logic behind doing so is inescapable, in our view. These are expenses from the public purse, after all.

The paper also wisely credits a local competitor, the Journal News in Westchester, for getting the ball rolling for an expose on Yonkers last year.

Sure, it would have been nice amid all this granular data to have more aggregate info on total pension liabilities and their impact on the state and local budgets, but still, a fine job. Good stuff in there, too, by the way, on public accounting standards, which are much more, um, flexible, than those of publicly traded companies.

(Dean Starkman)

— John Carney, freshly landed at, is good to point out a little-noticed last-minute change in the financial-reform bill that would exempt private-equity firms from having to register with the SEC, like hedge funds will.

There’s a possibility that this loophole might grow wider. The Senate bill leaves it to the SEC to define what counts as a venture capital fund and a private equity fund. This creates the potential for some hedge fund managers to attempt to game the system by influencing the SEC’s decision or remodeling themselves to fit whatever legal definitions the SEC puts forth.

Let’s hope we see this story fleshed out in the days and weeks ahead. Who lobbied for it? Who made the change?

And while we’re at it—why is it such a big deal to register with the SEC?

— And David Lazarus of the Los Angeles Times points out that payday lenders skate in the bill the Senate passed.

The legislation that now appears destined for President Obama’s desk won’t include an amendment that would have limited the number of high-interest loans payday lenders could make to cash-strapped consumers.

And he gets hold of an internal payday-lender email, which shows how these guys are well aware of the treadmill they have their customers on:

“After a customer repays their loan, the customer then asks for a new loan,” wrote Dan Harnum, a divisional director of operations for the company in Michigan.

“TELL YOUR CUSTOMER THAT YOU CAN’T LOAN TO THEM BECAUSE THE GOVERNMENT HAS PUT US OUT OF BUSINESS,” he instructed subordinates. “That will get their attention. Then ask them to write letters or call their senator/congressman”…

Then there’s the more insidious aspect of what Harnum wrote: The fact that customers keep coming back for more — an endless cycle of debt that leads to interest rates as high as 400% a year.

That’s what payday lenders were trying to protect

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.