Pensions and Securities Lending: Update

Further to our discussion of Detroit’s pension, we see that Missouri’s public pension is in a lawsuit with State Street Bank over their securities lending program.  These programs are intended to act like demand deposits — but the dollars are huge, so any movement of large blocks of funds are likely to affect liquidity.  What with pension plan losses on long term real estate and recession related securities, the plans may well be putting more pressure on the banks and borrowers to get their monies back.

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