Business Week takes a look at the potential for public pension plans to be a part of the public-private investment program Treasury designed to take troubled assets off bank balance sheets. This is a great idea, for a few reasons. One is that having these independent funds be the major buyers of the assets would cut down on some of the double-dealing that would come if major banks or private funds, already deeply involved in the financial mess, were central participants. Another is, as has been well observed, the PPIP is a very good deal for the private participants, and I'd rather see that very good deal go to these public pension funds -- and the citizens who rely on them for their retirements -- than to the much-derided titans of finance. It's good on the merits and it's good politics as well. In its initial white paper outlining the plan, the government emphasized that it hoped to work with major institutional investors like these funds, who have a buy-and-hold mentality that would allow them to maximize the long-term value of the troubled assets, rather than the short term profit focus of your standard hedge funds. While it's too early to tell how participation will game out, let's hope that at least some of these funds will be involved.
-- Tim Fernholz
