Lee Fang is a reporting fellow with The Investigative Fund at The Nation Institute.
Four months into his first term, Governor Chris Christie stood at the podium of the Manhattan Institute, a conservative think tank, and laid out what was billed as the “Christie Reform Agenda.” To enthusiastic applause, the New Jersey governor railed against what he described as an out-of-control state public pension system. “Our benefits are too rich, and our employees aren’t contributing enough, either,” he said. “We are careening our way toward becoming Greece.”
Christie had just won his first statewide election with the help of Paul Singer, the hedge fund manager who chairs the Manhattan Institute. The month before Christie’s election victory in November 2009, Singer had given $100,000 to the Republican Governors Association (RGA), which aired a barrage of advertisements in Christie’s favor.
In that campaign, among Christie’s lines of attack against incumbent Democrat Jon Corzine was that he had mismanaged the state pension system and had unethically invested retiree money on Wall Street. “Jon Corzine made it easier for his friends from Wall Street to manage New Jersey’s pension fund,” blasted a “Christie for Governor” press release.
But once he was elected, Governor Christie moved to award big pension management contracts to the Wall Street donors who have helped boost his political fortunes. In his second year in office, Christie’s administration proposed giving Singer’s hedge fund, Elliott Associates, a contract to manage $200 million in state public pension funds. Elliott Associates won the contract in 2012. Singer again demonstrated his political loyalty to Christie in December 2013, shortly after Christie became chair of the RGA, a coveted post for GOP presidential aspirants. This time, Singer gave the group $1.25 million, making him the largest contributor that year and significantly enlarging the RGA’s war chest under Christie.
Another hedge fund manager with close political ties to Christie, Daniel Loeb, has also won big contracts to manage state retiree money under the governor, The Nation has found.
Before it was tarnished by Bridgegate, Christie’s political brand hinged on the governor’s celebrated efforts to reform the public pension system—including his moves to increase the retirement age for some workers, cut benefits, and make adjustments to how much state employees pay into the plan. Less noticed was how, under Christie, the amount of retiree money in the hands of outside managers, such as private equity firms or hedge funds like Singer’s, dramatically increased, while the share going to less risky and more traditional investments like treasury notes or the S&P 500 declined.
* * *
Like many of the characters in the Bridgegate scandal, a key player in the Christie pension cronyism story has roots in his hometown of Livingston, New Jersey.
Before Christie was named class president of Livingston High School, another ambitious young man, Robert Grady, held that title. Grady helped bring a teenage Christie into local politics by introducing him to his father, the mayor of Livingston. The younger Grady would become something of a mentor to the future governor: he introduced Christie to political leaders in Trenton and, later, to GOP leaders like Dan Quayle and Jim Baker. Bill Palatucci, who would become Christie’s law partner and close political adviser, also came into contact with Christie through Grady, according to an interview that Grady gave to the Eagleton Institute of Politics at Rutgers University.