Former Oregon Treasurer Bill Rutherford
has mostly avoided the limelight since leaving office in 1987.
But after the Oregon Investment Council, which oversees $47 billion in Oregon pension and other funds, recently decided to invest $400 million in a distressed asset fund run by Dallas-based Lone Star Funds (with the possibility of another $400 million later), Rutherford wrote
[PDF] to current Treasurer Ben Westlund
In the twenty-one years that have elapsed since I was Treasurer, I have not commented on the decisions of the OIC or the Treasurer's office, however, the recent decision of the OIC to hire a distressed debt manager prompts me to write to you.
Given the nature of the investment, I do not think it is appropriate for the State at all. State Government is very powerful and should use its power lightly. In this case, the State will be funding activities that will impact ordinary citizens, no doubt some of them Oregonians, in a very negative manner.
Rutherford's Oct. 6 letter followed
Portland investment advisor Bill Parish's
criticism of the Lone Star investment in a Sept. 30 interview
with The Oregonian
Westlund, who took office, responded
[PDF] to Rutherford on Oct. 9.
Investing is a tough business and while there may be rumors and allegations about the Lone Star investment and the underlying business model, you know better than most that the Investment Division is beyond reproach when it comes to the careful consideration and vetting of proposed investments...when it comes to distressed securities, investors who buy assets and debt have little interest in foreclosing on mortgages or, as you suggest 'abusing' citizens.
Westlund went on to describe the OIC's "longstanding and profitable" relationship with Lone Star, which dates to 1993 and included $1.5 billion in investments before the latest transaction.
In response to the questions Parish raised and Rutherford echoed, the treasury department issued
[PDF] some additional information.