As Reason readers know, public pensions are "The Next Catastrophe" facing the economy and governments at all levels. What might be less understood is the curious fact that regulatory oversight of municipal and state pensions, despite them being exponentially more vulnerable to political machinations on management, contributions, and investments, is much less strict than regulatory oversight of corporate pension funds. Buried in a New York Timesarticle today:
In the corporate world, the Financial Accounting Standards Board writes the rules for pension disclosures. It also seeks to avoid bias, and also works at a slow, deliberative pace.
But FASB has a great deal more power and independence than its governmental cousin. Its rules are enforced by the S.E.C., and it was given an independent funding source in the post-Enron accounting reforms. […]
The governmental board, by contrast, must still raise its own money. And because no government agency enforces its policies, it must issue rules that states and municipalities will adopt voluntarily. Six of its seven members work on a part-time basis.
Toothless oversight of voluntary regulations over politicized pools of billions of dollars? What on earth could go wrong?
