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A12 BUSINESS
Monday 11 July 2022

Retired Houston Fire Captain Russell Harris poses for a photograph inside his workshop at his home
Wednesday, June 22, 2022, in East Bernard, Texas.
Associated Press
Crypto plunge is cautionary tale for

public pension funds

By STEVE KARNOWSKI cult to tell whether they’ve The U.S. Department of La-
Associated Press made or lost money, let bor urges “extreme care”
MINNEAPOLIS (AP) — When alone how much, and for in crypto investments be-
the Houston Firefight- the most part fund officials cause of the high risks. The
ers Relief and Retirement won’t say. recent plunge in crypto
Fund bought $25 million in But the recent crypto melt- prices has caused Wash-
cryptocurrencies, with the down has prompted a ington to more closely
fund’s chief investment of- larger question: For pension scrutinize the freewheel-
ficer touting their potential, funds that ensure teachers, ing industry. After the col-
retired fire Capt. Russell firefighters, police and oth- lapse of $40 billion crypto
Harris was concerned. er public workers receive asset known as Terra, sena-
Harris, 62, has attended the guaranteed benefits in re- tors in both parties have
funerals of 34 firefighters tirement after public ser- proposed legislation that
killed in the line of duty. He vice, is any amount of cryp- would regulate crypto for
was already worried about to investment too risky? the first time, and Treasury
his pension after an over- Many public pension funds Secretary Janet Yellen has
haul by state and city offi- across the U.S. are under- called for more oversight of
cials cut payments as they funded, sometimes seri- crypto ventures.
grappled with the ability to ously so, which leads them It’s not clear how that
pay out benefits. He didn’t to take risks to try to catch panned out in the crypto-
see crypto, unproven in his up. That doesn’t always currency market slide this
eyes, as an answer. work out, and the risk ex- year. Officials from fund
“I don’t like it,” Harris said. tends not just to the funds and the union didn’t re-
“There’s too many pyramid but to taxpayers who might spond to multiple requests
schemes that everybody have to bail them out, ei- for comment. But the fund
gets wrapped up in. That’s ther through higher taxes bought in when bitcoin
the way I see this cryptocur- or diverting spending away prices were close to their
rency at this time. ... There from other needs. peak of nearly $67,000,
might be a place for it, but Keith Brainard, research and they’ve been on the
it’s still new and nobody un- director for the National decline since then, dipping
derstands it.” Association of State Retire- below $20,000 in June.
The plunge in prices for ment Administrators, said The fund’s chairman, Brett
Bitcoin and other crypto- he wasn’t aware of more Besselman, said in a first-
currencies in recent weeks than a handful of public quarter report that it was
provides a cautionary tale pension funds that have in- healthy with an overall rate
for the handful of public vested in crypto. of return of 33.7% in 2021.
pension funds that have “There may come a day Houston Mayor Sylvester
dipped their toes in the when crypto settles down Turner said earlier this year
crypto pool over the past and becomes adequately that the 2017 overhaul is
few years. Most have done understood and mature as working well and, thanks to
it indirectly through stocks a potential investment that strong returns in 2021, has
or investment funds that public pension funds might put his city’s pension funds
serve as proxies for the larg- embrace them,” Brainard well ahead of schedule to-
er crypto market. A lack of said. “I’m just not sure that ward eliminating their un-
transparency makes it diffi- we’re there yet.” funded liabilities.q