After a little digging, I realized that these "unusual" investments were in hedge funds. What's wrong with that? For one thing, they make up 12% of the pension fund, which is a pretty high percentage. Another problem is that they are so risky that only a handful of Counties will invest in them. Hedge managers usually get 20% of whatever profits are earned, giving them an incentive to gamble with your money. Most troubling of all was learning that Bethlehem actually has invested in "life settlements," an unregulated industry that buys life insurance policies from senior citizens and then waits for them to die ahead of schedule, like ghouls.
Why would Mayor John Callahan, whose City is floating into a financial abyss, agree to these bizarre investments? A reader has answered that question. A Morning Call report lists the securities firm handling the pension - Barroway Topaz Kessler Meltzer Check, LLP - as Callahan's biggest Congressional campaign contributor. As of the end of June, individuals at that firm had kicked in $29,317, with another $4,800 from the firm itself.
This firm also gave $10,000 to Callahan's state campaign fund in 10/8/08.
Oh yeah, Callahan wants to reform Wall Street.