Thursday, July 07, 2005

 

Poof! Another $71 million disappears at BWC

As the Duke (J. Wayne, not Cunningham) used to say, this is gettin' about re-goddam-diculous.

Despite assurances that no more losses were going to turn up at the Ohio Bureau of Workers' Compensation, the Ohio News Network has just announced that there is more bad news.
The Ohio Bureau of Workers' Compensation says it has fired a second fund manager after discovering it had lost $71 million.

The agency says $60 million of the loss can be blamed on management decisions.

Tina Kielmeyer is the bureau's interim administrator. She has terminated investment dealings with Allegiant Asset Management, a subsidiary of Cleveland-based National City.

Allegiant is the second fund manager with which the bureau has severed ties. On June 7th, the bureau revealed that Pittsburgh-based MDL Capital Management had lost $215 million of the agency's investments.
Now, National City is one of the most politically connected banks in the state. But, obviously being connected doesn't mean you know what the hell you're doing. That $60 million loss due to management decisions may haunt them for awhile.

By the way, National City employees (mainly executives) have given various Ohio GOP candidates nearly $111,000 between 1999 and 2004. This includes $40,500 for Taft's campaigns in 2002 and 1998. Other heavy recipients have been Larry Householder, Joe Deter, and Jim Petro.

[UPDATE] CoinsForChange has more here including a downloadable versions of the BWC news release.

Now that we have read the actual release, it's important to note that it is Ennis & Knupp, the consulting firm hired to sort out what the hell is going on at BWC, that is asserting that management decisions cause $60 million of the $71 million lost. In other words, independent E&K are asserting that independent economic and stock market issues could be behind $11 million of the loss, but that most of it was due to bad management decisions by Allegiant/National City. Had BWC a decent risk management system in place, it's own management would have detected the Allegiant/National City blunders.

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