Scrivener.net

Monday, November 30, 2009

Now that he's running the entire economy, don't we all feel better? 

Harvard ignored warnings about investments

Advisers told Summers, others not to put so much cash in market; losses hit $1.8b

It happened at least once a year, every year. In a roomful of a dozen Harvard University financial officials, Jack Meyer, the hugely successful head of Harvardís endowment, and Lawrence Summers, then the schoolís president, would face off in a heated debate. The topic: cash and how the university was managing - or mismanaging - its basic operating funds.

Meyer repeatedly warned Summers and other Harvard officials that the school was being too aggressive with billions of dollars in cash ... Meyerís successor, Mohamed El-Erian, would later sound the same warnings to Summers, and to Harvard financial staff and board members...

But the warnings fell on deaf ears, under Summersís regime and beyond. And when the market crashed in the fall of 2008, Harvard would pay dearly, as $1.8 billion in cash simply vanished. Indeed, it is still paying, in the form of tighter budgets, deferred expansion plans, and big interest payments on bonds issued to cover the losses...

Harvard ... would pay $500 million to get out of the interest-rate swaps Summers had entered into, which imploded when rates fell instead of rising...

Summers, now head of President Obamaís economic team, declined to be quoted on his handling of Harvard finances... [Boston.com]