They’d said “You’re tax-free till you die.”
They’d said “Vast billions, all tax-free.”
And as the years went slowly by,
She went past Jordan’s GDP.
They kept a tally on their wall,
And went half-crazy now and then
She’d given thirty mill apiece
To her favorite money men.
She kept the main part for herself
Though Grassley said that wouldn’t do.
She read his thoughts on five percent,
And told him “Senator, fuck you.”
I went to see her just today,
And now the tears began to flow
Endowment’s pushing forty bill,
But some of that might have to go.
They started taxing her today
They placed a wreath upon her door
And soon they’ll carry her away
They started taxing her today
Frank Rich, New York Times:
… Last month the president of Harvard, Drew Gilpin Faust, contributed a stirring essay to The Times regretting that educational institutions did not make stronger efforts to assert the fundamental values of pure intellectual inquiry while “the world indulged in a bubble of false prosperity and excessive materialism.” She rued the rise of business as the most popular undergraduate major, an implicit reference to the go-go atmosphere during the reign of her predecessor, Lawrence Summers, now President Obama’s chief economic adviser.
What went unsaid, of course, is that some of Harvard’s most prominent alumni of the pre-Faust era — Summers, Blankfein, Robert Rubin et al. — were major players during the last two bubbles. As coincidence would have it, the same edition of The Times that published Faust’s essay also included an article about how Harvard was scrounging for bucks by licensing a line of overpriced preppy clothing under the brand Harvard Yard. This sop to excessive materialism will be a scant recompense for the $11 billion Harvard’s endowment managers lost in their own bad gamble on interest-rate swaps…
Yes, in the blink of an eye Harvard University has gone from a pigsty under Lawrence Summers to The Little House on the Prairie under Drew Faust — complete with homespun tales about the evils of materialism.
If you buy that, you — like Summers with those interest-rate swaps — will buy anything.
“So it’s a very bad situation. We feel like Harvard has plenty of money. When I came here 20 years ago they had $4.5 billion in their endowment. Now they have 29 billion. To me, that’s a staggering record of capital accumulation. And they made some risky investments that made the endowment skyrocket during the boom times – leveraged private equity, oil, timber, hedge funds, and of course these things, when the economy is doing great they do fantastic and the endowment doubled in just a few years. Predictably, in a downturn, those investments are going to take a hit. But they want us to pay for that. They want ordinary workers to pay for their investment strategies. They pay their top people – one guy got 6.4 million in a year for managing a Harvard endowment. There were several of them. It was reported in the Globe. He goes up from 3 million to 6 million. So why do they have to cut jobs?”
… from the Epicurean Dealmaker.
Consider his comments in connection with this blogger’s recent estimate of forty percent losses in Harvard’s endowment.