By Bob Plain in RIFuture.org
Rhode Island has long worried that its oft-lauded efforts to
reduce public sector pensions was being secretly funded by Wall Street fat
cats. Well, it turns out that one of the biggest financial supporters of
pension reform is a former Enron energy trader who went on to make billions as
a hedge fund manager.
John Arnold, a 38-year-old Houston man worth more than $3
billion, donated something less than a half million dollars to EngageRI, the
shadowy non-profit that paid for much of the advertising pushing for pension
cuts, the Wall Street Journal reported Tuesday.
“…a key player in the campaign to curtail pension costs in Rhode
Island was financed, in large part, by a Houston billionaire who sees the state
as an opening salvo in a quest to transform retirement systems nationwide,”
according to the WSJ.
Arnold, through the non-profit he started to affect pension
politics across the country, has given more than $7 million to various efforts
nationally, according to the WSJ. He may have funded well more than half of the
anti-public sector pension ad campaign in Rhode Island all by himself, according to WPRI’s Ted Nesi, who pick up on the story last night.
According to Fortune article, Arnold and his wife have also
“donated $700 million to a family foundation that gives money to charter
schools run by an organization called the Kipp Academy, on whose board Arnold
serves.”
A spokesman described he and his wife to the WSJ as being an
“independent-minded Democrats” and said he has no financial interest in pension
reform efforts. But it certainly wouldn’t be the first time he made money on
the misfortune of others. Here’s how the Fortune article described him:
Arnold has the brain of an economist, the experience of a
veteran gas man, and the iron stomach of a riverboat gambler. Perhaps most
notable, though, is his uncanny ability to extract colossal profits from
catastrophic circumstances.
He began his career as a wunderkind twentysomething trader at
Enron — and escaped that disaster not only with his reputation intact but also
with the biggest bonus given to any employee, which he used to seed a new fund.
A few years later he earned $1 billion betting that natural-gas
prices would go down just as a reputedly brilliant gas trader at Amaranth made
a spectacularly disastrous bet in the opposite direction. More recently, as the
commodities bubble burst in 2008, taking even more fund managers with it,
Arnold foresaw the looming collapse and once again nearly doubled his money.
Bob Plain is
the editor/publisher of Rhode Island's Future. Previously, he's worked as a
reporter for several different news organizations both in Rhode Island and across
the country.