Mr. Blow is off today. Mr. Nocera, in “Investing in Guns,” says in spite of Newtown and all the other mass shootings, a look at one Cerberus investment fund would suggest that it’s still all about making money, not saving lives. No shit, Sherlock… Ms. Collins, in “The Girl of My Dreams,” says she’s fictional, but you can’t have everything. Here’s Mr. Nocera:
In 2006, Cerberus Capital Management, the private equity firm run by the secretive financier Steven Feinberg, set out to raise $6.5 billion in a new fund called Cerberus Institutional Partners Series IV. Feinberg’s reputation for extracting value from troubled companies — by replacing management, shuttering facilities and creating “efficiencies” — was such that by May 2007, when the fund was finally closed, it had gotten commitments for nearly $1 billion more than it had sought.
Cerberus Institutional Partners Series IV is the fund that took over Chrysler in 2007. It bought General Motors’ financing arm, now called Ally Financial. It gobbled up hospitals, purchased bus companies, and even bought the raunchy magazine Maxim.
It is also the fund that bought Bushmaster Firearms, the company that made the assault weapon used by Adam Lanza to massacre 20 children and seven adults in Newtown, Conn., last month. It bought Remington Arms, the maker of the pump-action shotgun that was among the guns James Holmes used to kill 12 people and wound 58 in Aurora, Colo. It bought a handful of other firearms companies, which it then merged into a new parent company, Freedom Group. At which point, Cerberus was the largest manufacturer of guns and ammunition in the country.
Not long ago, I obtained a partial list of the institutional investors that committed money to the Cerberus fund. One of the investors, the California State Teachers’ Retirement System, which put in $500 million, has already announced that it will divest its gun holdings. “We shouldn’t be investing in things like that,” says Bill Lockyer, the California state treasurer. He noted that assault weapons are illegal in California.
Most of the other big investors, however, have kept their heads down. TIAA-CREF, the financial services giant, committed $147.8 million to the Series IV fund. (“No comment,” said a spokesman.) The State of Wisconsin Investment Board put up $100 million. The University of Texas endowment made a $75 million commitment; the Regents of the University of California kicked in $40 million; the University of Missouri endowment was an investor. So were the Los Angeles Fire and Police Pension system, the Indiana Public Retirement System, and the Pennsylvania Public School Employees’ Retirement System (which kicked in $400 million). And plenty of others.
When I called these investors to ask their rationale for investing in a fund that financed a gun “roll-up,” as the Cerberus strategy is called, I got three main responses. The first was that the percentage of their investment that went to Freedom Group was minuscule. “We have a very small investment in Bushmaster, which translates to about $1 million,” said Dianne Klein, a spokeswoman for the University of California system. (She added that the California system was going to divest its gun holdings.) Jennifer Hollingshead at the University of Missouri told me that the endowment’s exposure was less than $450,000 — “which represents about 0.01 percent of our total portfolio.”
The second response was that, as limited partners, the institutional investors didn’t have a say in how Cerberus invested the money. The fact that Feinberg decided to buy companies whose guns have repeatedly been used for mass slaughter was, in effect, his decision to make.
The third was that the core duty of a pension fund or university endowment is to maximize returns. Nobody made this point more vehemently than Bruce Zimmerman, a spokesman for the University of Texas Investment Management Company. “We have no plans to divest,” he said. “We invest strictly on economic considerations, and we do not take into account social and political consideration.”
Cerberus never tried to hide what it was doing. And why would it? It was proud of its gun strategy. It held annual meetings with its investors and talked freely about Freedom Group. Investors were also aware that in 2010, Cerberus had tried (and failed) to take Freedom Group public.
But until Newtown, none of the investors gave the business a second’s thought. Aurora, Fort Hood, Wisconsin — and dozens of other mass slaughters — came and went, and the investors stuck with Cerberus.
Newtown, it is often said, has changed that dynamic, sensitizing the country to the insanity of its gun laws, and giving gun control advocates hope that reform might finally be possible. But with the tragedy barely a month old, you can already feel the pushback. Supporters of the National Rifle Association in Congress are vowing to resist any effort to tighten the nation’s gun laws. Gun-friendly state legislators are pushing absurd laws aimed at pre-empting federal gun legislation. And then there are the investors, who have a unique ability to push companies to change, if they so choose. (Just recall the South African boycott.)
What I learned this week is that, Newtown notwithstanding, too many of them have other priorities. Making money is still more important that saving lives.
What on earth took you so very, very long to learn that, Joe? Here’s Ms. Collins:
There is nothing the world loves more than an athlete who’s playing the game on behalf of a dying loved one.
In the land of sports, people who have terminal illnesses are always more interested in the team’s fortunes than in having their son/brother/lover/best friend at their bedside. The story’s been a staple ever since the expiring Ronald Reagan told Notre Dame to “win just one for the Gipper” in “Knute Rockne — All American.”
And now we have Manti Te’o, the star linebacker for Notre Dame, whose dying girlfriend turned out to be imaginary. But imaginary with a lot of team spirit. “Babe, if anything happens to me, you promise that you’ll stay there and you’ll play and you’ll honor me through the way you play,” she told him when she was critically injured in a car crash, fell into a coma and then emerged to learn she had leukemia. When she was conscious, she devoted much of her time to writing inspirational letters to Te’o before each game.
Such a girlfriend does not exist. Somebody made her up, and the sports world is currently debating whether Te’o was the victim of a hoax, or part of the conspiracy.
All I can say is, the story tells you a lot.
Fans cheered when Te’o played through what he said was the day of the funeral of his girlfriend, Lennay Kekua, who died on the same day as his actual grandmother. (“I knew…that my girlfriend and my family would want me to be out there. They wouldn’t want me to be sulking over things,” he told Sports Illustrated.)
It’s the American way. But as the story unfolded, it turned out that she didn’t ever require his presence. In an interview with Sports Illustrated, Te’o said that at one point, he was on his way home to Hawaii for summer break when the comatose Lennay almost died in a hospital in California. “They were scheduled to pull the plug while I was in the air,” he told Sports Illustrated.
It didn’t seem to occur to him that he might have dropped by. Do you think this is a young-man fantasy — a girlfriend so lacking in neediness that you don’t even have to visit her in the hospital while she’s in a coma followed by leukemia?
In fact, there was apparently never any physical connection. They talked on the phone. Texted all the time. But the star linebacker — who reportedly saw other flesh-and-blood girls on campus — didn’t seem to feel this special romance was lacking anything simply because it had no three-dimensional aspects.
Maybe in an era when “dating” seems to mean “send texts about whether to get together later,” this counts as a fulfilling relationship.
It’s possible Te’o was the credulous victim of an elaborate trick. But he was surrounded by a veritable army of coaches, chaplains and mentors, who were presumably privy to the Lennay saga from the start. Certainly they knew all about it when the Notre Dame publicity machine made it a core part of the football team’s undefeated-until-the-championship-game season. But nobody seemed to raise an eyebrow.
If you listened to the story while sitting next to Te’o on a bus, you would have warned him not to tell a national TV audience about this girlfriend until he got some proof she actually existed. (“We met just, ummmm, just she knew my cousin. And kind of saw me there so. Just kind of regular,” he told Sports Illustrated.)
But nobody at Notre Dame seems to have paid enough attention to figure out that the girl at the center of their winning-season story existed in the same universe as the Little Mermaid.
Right after Christmas, Te’o told his coach that a woman who sounded like the dead girlfriend had called him to say she wasn’t deceased after all. The coach told the higher ups, and Notre Dame hired an outside firm to investigate the case. When an exposé broke on the Web site Deadspin, the school’s athletic director, Jack Swarbrick, held a press conference to tearfully announce that the investigation showed that Te’o was the victim of a “very elaborate, sophisticated hoax perpetrated for reasons we can’t fully understand. But it had a cruelty at its core.”
This all occurred a couple of years after the Notre Dame team was involved in a genuine tragedy when a freshman from a neighboring girls’ college reported she had been sexually assaulted by a football player. The school did not order up an outside investigation. In fact, there appeared to be no investigation at all. After a period of dead silence in which she received a threatening text from another player, the girl died from an overdose of medication. Nothing else happened. Writing this week in The Washington Post, Melinda Henneberger, a Notre Dame graduate, noted that “my alma mater held the kind of emotional news conference for the fake dead girl they never held for the real one, Lizzy Seeberg.”
Game’s over. Notre Dame loses.
Who the F cares? The panting, fawning coverage of Lance “I’m a cheat, liar and fraud” Armstrong and the enormous frothing and fizzing over this dude disgust me. Bread and circuses, people, nothing but bread and circuses. It ain’t pretty being around at the end of an empire…