from Zero Hedge:
“Merry Christmas, mayor. Hopefully you have a good Christmas because you have successfully screwed over the retirees, the firefighters and the police officers.”
Two days after the Mayor of Dallas, Mike Rawlings, filed a lawsuit against the Dallas Police and Fire Pension system to block withdrawals, which he referred to as a “run on the bank” of an “insolvent” pension system in “financial crisis, the Pension’s board has finally taken steps to halt further withdrawals. Of course, this delayed action has come only after $500 million in deposits have been withdrawn since just August.
According to the Dallas Daily News, an incremental $154mm in withdrawal requests were pending at the time the decision was made earlier today.
The Dallas Police and Fire Pension System’s Board of Trustees suspended lump-sum withdrawals from the pension fund Thursday, staving off a possible restraining order and stopping $154 million in withdrawal requests.
The system was set to pay out the weekly requests Friday. Pension officials said allowing the withdrawals would leave them without the liquid reserves required to sustain $2.1 billion fund.
“Our situation is currently critical, and we took action,” Board chairman Sam Friar said.
While Dallas citizens cheered the decision, even opponents of the Mayor’s admitted that the redemptions had to be halted if the city had any chance of saving the pension system from insolvency.
Rawlings on Thursday afternoon told a crowd gathered at a Dallas Regional Chamber that “the bleeding has stopped. We can turn this ship around.”
The crowd responded with cheers after the mayor’s announcement of the board’s decision.
At the pension board meeting, the mood was more somber.
Council member Scott Griggs said he couldn’t let the $154 million “go out the door” on Friday.
His council colleague, Philip Kingston, a board trustee, said the mayor “unquestionably” forced the pension board’s hand. He said Thursday was “the worst day I’ve had in public office.”
“Unfortunately, financially, this had to happen,” he said.
The fund has about $729 million in liquid assets. It needs to keep about $600 million on hand, meaning the restrictions could have been coming at some point even without the mayor’s actions. The withdrawal requests this week alone would have meant the fund would dip below that level.
Of course, not everyone was happy with the decision as at least one retired police officer threatened a lawsuit to force the fund to honor redemption requests while another declared that Mayor Rawlings had “successfully screwed over the retirees, the firefighters and the police officers.”
One retired police sergeant, Pete Bailey, suggested a lawsuit could be in the offing if the system didn’t pay out the requests that were made Tuesday. Friar understood that they might deal with more litigation.
“We may just have to deal with that, but that’s what the board decides,” Friar said. “We acted in the best interest of the pension fund today.”
Retired Dallas police officer Jerry Rhodes, a pension meeting fixture, said he believed the board did what it had to do. Then he sarcastically lauded Rawlings.
“Merry Christmas, mayor,” he said. “Hopefully you have a good Christmas because you have successfully screwed over the retirees, the firefighters and the police officers.”
Perhaps future ponzi schemes pension systems will take note of Dallas’ current situation prior to guaranteeing 8% returns on retirees’ pension balances. Who could have ever guessed that a decision like that could have backfired so badly?
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For those who missed it, here is what we recently posted after Mayor Rawlings sued to halt pension withdrawals.
Last week, Dallas Mayor Michael Rawlings sent a scathing letter to the Dallas Police and Fire Pension (DPFP) Board demanded that withdrawals be halted immediately until the “solvency and actuarial soundness of the Pension System is restored.” That said, the Mayor’s request was seemingly ignored as he has now filed a lawsuit with the Dallas District Court to force the pension board to halt withdrawals amid a “run on the bank.”
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