(Host) State Treasurer Jim Douglas says Vermont’s public pension funds were not affected by the collapse of the WorldCom Corporation, but Douglas is very concerned that consumer confidence has been shaken by a number of recent corporate scandals.
VPR’s Bob Kinzel reports.
(Kinzel) According to a new report, state pension funds in some of the largest states in the country have suffered losses in the hundreds of millions of dollars because of the financial crisis at WorldCom, the nation’s second largest telephone company.
Last month the price of shares of WorldCom plummeted after the company disclosed it had hidden nearly $4 billion in expenses. In Vermont, the WorldCom scandal will have very little impact on state employee and teacher pension funds. That’s because State Treasurer Jim Douglas says the Wall Street firm handling the Vermont accounts decided to sell off the state’s holdings in WorldCom in the middle of May:
(Douglas) “We had some until earlier this Spring when the company was removed from the S & P 500 Index and liquidated some shares at that point at about a break even situation. We do hold some bonds in WorldCom and we’ll be selling those at a modest loss. We’ll probably lose a couple of hundred thousand dollars but unlike some other states, I’m pleased to say that our exposure is quite limited.”
(Kinzel) But Douglas is concerned about how recent scandals involving WorldCom, Global Crossing and Enron are affecting consumer confidence in the stock market:
(Douglas) “It’s very, very important I think for the health of the capital markets going forward that confidence be restored in corporate America. It used to be that most in the public viewed large American corporations as rock solid, ethical, well run. But that confidence has been shaken recently by the scandals that we’ve been seeing in the recent past. So I think it’s very, very important for the regulatory folks in Washington to more closely monitor the performance of these large companies so that the investors will feel better and more confident in investing in the stock market.”
(Kinzel) Douglas says the small losses incurred through the sale of WorldCom bonds will have virtually no effect on the State Employee Pension Fund because that Fund has approximately $2.2 billion in it.
For Vermont Public Radio, I’m Bob Kinzel in Montpelier.