Trump Skewers Kasich on Lehman in Dumpster Fire Debate

John Kasich tried swinging at Donald Trump tonight at the dumpster fire debate, but the only memorable takeaway was Trump masterfully trashing Kasich for his Lehman job during its collapse.

Since Trump doesn’t have a full-blown rapid response shop, we’re happy to oblige and send background on Kasich trying to cash in on his Ohio connections by pitching Lehman funds to Ohio pensions, which ended up costing Ohio $500 million when Lehman went under:

Kasich Tried To Sell Lehman Brothers’ Funds To Ohio Pensions 

Kasich Pitched State Pensions On Investing With Lehman Brothers 

Columbus Dispatch: While Lehman Brother’s Columbus Office Managing Director, “Kasich Tried To Persuade Two State Pension Funds In 2002 To Invest With Lehman Brothers.”According to the Columbus Dispatch, “Republican gubernatorial candidate John Kasich tried to persuade two state pension funds in 2002 to invest with Lehman Brothers while he was the managing director of the investment banking house’s Columbus office. In a reply to questions from The Dispatch, Kasich campaign officials acknowledged that the former congressman helped arrange the two meetings between Lehman officials and representatives of the Ohio Police and Fire Pension Fund and the Ohio Public Employees Retirement System, known as OPERS.” [Columbus Dispatch, 5/12/10]

Kasich Denied Further Involvement With State-Lehman Deal After Arranging Meetings…

2010: Kasich Campaign Claimed “Kasich Never Approached Any Other Ohio Governmental Entity About Doing Business With Lehman.” According to the Columbus Dispatch, “Kasich campaign officials said in a statement that ‘these meetings did not result in business for Lehman Brothers, and John earned no commission from this or any other public sector business.’ Kasich never approached any other Ohio governmental entity about doing business with Lehman, the campaign said.” [Columbus Dispatch, 5/12/10] 

Kasich On Arranging Meeting Between State Pension And Lehman Brothers: “I Was Not In On It.” According to the Columbus Dispatch, “In a statement to The Dispatch this week, the Kasich campaign acknowledged that he helped arrange two meetings in 2002 between Lehman officials and representatives of the public employees and police and fire funds. The meetings did not result in any business for Lehman, where Kasich was a director. […] In a separate interview, Kasich said he was doing a professional favor for a colleague by arranging the meetings. ‘It was no more; we didn’t get any business out of it. I was not in on it,’ he said. ‘That’s the end of it. Period.’” [Columbus Dispatch, 5/13/10]

…But Reportedly Also Called Teachers Pension Manager For Sales Pitch

Dayton Daily News, 2010: “A Manager At The State Teachers Retirement System Of Ohio Recalls Kasich Making A Sales Pitch To Him During A Short Telephone Call In Mid-2002.”According to the Dayton Daily News, “This spring, Kasich said that he arranged introductory meetings between officials at Lehman Brothers and managers at the Ohio Police & Fire Pension Fund and the Ohio Public Employees Retirement System. His campaign said that that was the end of Kasich’s involvement. But a manager at the State Teachers Retirement System of Ohio recalls Kasich making a sales pitch to him during a short telephone call in mid-2002, according to a response by STRS to a public records request from the Ohio Democratic Party. STRS used a different firm for the real estate deal, not Lehman Brothers.” [Dayton Daily News, 7/22/10] 

Lehman Collapse Cost Ohio’s Pensions Nearly $500 Million 

ABC News: “The Collapse Of Lehman Brothers Eventually Cost Ohio’s Pensions Nearly $500 Million.” According to ABC News, “The Columbus Dispatch reported this week that Kasich tried to persuade two state pension funds in 2002 to invest with Lehman Brothers while he was the managing director of the investment banking house’s Columbus office. The collapse of Lehman Brothers eventually cost Ohio’s pensions nearly $500 million.” [ABC News, 5/12/10] 

Columbus Dispatch: Ohio Pension Funds Held “Toxic” Lehman Assets, Led To Losses Of $220-$480 Million During Crash. According to the Columbus Dispatch, “But it was a different story at Ohio’s five pension funds. For a number of reasons, the funds could not or did not move quickly enough to sell off questionable assets. As a result, the treasurer’s office, which acts as custodian but does not invest pension monies, calculated that the funds had a combined $480 million loss in market value solely from Lehman investments. Officials at the pension funds, in response to questions from The Dispatch, calculated direct losses at about $220 million. The difference between the two figures essentially represents the higher value the investments reached before plummeting when the markets fell in September 2008. Ahmad said the types of investments at the treasurer’s office and the pension funds were different. The treasurer had short-term commercial paper, including some from Lehman Brothers, while the pension funds generally had longer-term mortgage- or asset-backed securities, or investments in failed or failing financial institutions. But he said the bottom line is the same: ‘Toxic means toxic.’ A spokesman for the Ohio Police & Fire Pension Fund said its external fund managers made their investment decisions based on objective criteria.” [Columbus Dispatch, 5/12/10]

Pension Funds Held Mortgage Back Securities. According to public records requests by Congresswoman Kilroy, Ohio’s public pension funds held mortgage securities.

OP&F COLLATERALIZED MORTG LEHMAN MORTGAGE TRUST 6% 03/25/2038
OP&F COLLATERALIZED MORTG LEHMAN SERIES 2006-2 CLASS 1A1 6.479505%
OP&F COLLATERALIZED MORTG LEHMAN XS TRUST .73125% 02/25/2046
PERS COMMERCIAL MTG BACKED SEC LEHMAN BROS FR COM MTG TST 06-LLFC5 FR CMO15/SEP/2021 USD1000 ‘A1 144A’
PERS COMMERCIAL MTG BACKED SEC LEHMAN BROTHERS SMALL BALANCE COMMERCIAL MORTGAGE TRUST 2007-2 2A1 14 5.910% 25/JUN/2037
PERS FIXED INCOME – CMO/REMIC LEHMAN MORTGAGE TRUST 27/JUL/2007-A9 VARIABLE25/AUG/2037
PERS FIXED INCOME – CMO/REMIC LEHMAN XS NIM COMPANY 5.5% 30/DEC/2035
PERS FIXED INCOME – CMO/REMIC LEHMAN XS TRUST 2006-17 WF-2 VARIABLE 25/NOV/2036
SERS COLLATERALIZED MORTG LEHMAN SERIES 2005-7N 1A1A .74125% 12/25
SERS COLLATERALIZED MORTG LEHMAN 2005-7N 1A1B .77125% 12/25/2035
SERS COLLATERALIZED MORTG LEHMAN 2005-7N 3A1 .75125% 12/25/2035
SERS COLLATERALIZED MORTG LEHMAN XS TRUST .73125% 02/25/2046
SERS COLLATERALIZED MORTG LEHMAN SERIES 2006-4N CLASS A2A .69125%
SERS COLLATERALIZED MORTG LEHMAN XS TRUST SERIES 2006-16N A4A .661
SERS COLLATERALIZED MORTG LEHMAN XS TRUST SERIES 2007-4N CLASS 3A2
SERS COLLATERALIZED MORTG LEHMAN SERIES 2007-16W 1.32125% 09/25/20

[Pension Public Record Requests] 

2010: Kasich Staff Advised State Pension Fund Executive On Messaging For Ohio’s Lehman Brothers Losses 

AP, 2010: Kasich Campaign Operative Advised State Pension Fund “On How To Explain Its Lehman Brothers Losses To Reporters. According to the Associated Press, “A campaign operative of Republican gubernatorial candidate John Kasich gave a state pension fund advice on how to explain its Lehman Brothers losses to reporters, an e-mail obtained by The Associated Press shows. […]In his May 3 e-mail, Kasich spokesman Scott Milburn advised Ohio Public Employees Retirement System executive Carol Drake that it would be ‘valuable to explain’ that Lehman investments included not only Lehman stock and securities but money the firm invested in other companies, such as McDonald’s. ‘The media will not get the full picture unless you explain it: not all of this money was lost as a result of the Lehman bankruptcy,’ Milburn wrote. Milburn and Drake are both alums of the administration of former GOP Gov. Bob Taft.” [Associated Press, 6/17/10]