New York City’s pension funds faced a significant setback with an almost $2 million investment loss after First Republic and Signature banks collapsed earlier this year. This information was obtained through a Freedom of Information Law request by the NY Post to the New York City Comptroller’s Office.
While a federal bailout managed to salvage bank depositors, city pension funds invested in stocks and bonds of the failed banks could not be recovered.
Chloe Chik, a spokesperson for Comptroller Brad Lander, said, “The overall loss is negligible in the context of the daily market motions of our $240 billion pension funds.”
The fallout from the bank failures impacted all five city pension funds. New York City’s teachers bore the brunt of the loss, suffering a setback of nearly $800,000. The city’s police force followed, with losses amounting to over $450,000, and the New York City Employees’ Retirement System experienced a loss of more than $439,000.
The fire pensions and the city Board of Education Retirement System reported lesser losses.
More than $30 million in losses have been incurred by city pensions following Silicon Valley Bank’s collapse.
Notably, both Lander and Silicon Valley Bank advocated for Environmental, Social, and Governance (ESG) investing; this approach emphasizes investments in entities that support progressive political causes rather than just financial returns.
A report released last month argued that a lack of oversight from the Federal Reserve contributed significantly to the swift downfall of Silicon Valley Bank (SVB), the first bank to close which began the chain reaction that led to the closure of the First Republic and Signature Bank.
The document, compiled by Michael Barr, the Federal Reserve’s Vice Chair for Supervision, pointed out that the Federal supervisors did not adequately assess the risks as SVB, an initially small bank for start-ups in Silicon Valley, California, grew larger and more complex.
Barr emphasized that the bank’s risk management was deficient at the uppermost levels, involving its top executives and board of directors. The report criticized the lack of supervisory action, calling it indecisive, and failing to properly address the bank’s vulnerabilities.