Peter Schweitzer, writing in the New York Post today, exposes blatant hypocrisy on the part of Bill Clinton, his wealthy supporter Ron Burkle, and assorted other members of the left wing political/governmental apparat.

Bill Clinton has himself promoted an investment fund that promises to put money into "lower—income urban and rural communities" — but instead devotes its cash to Al Gore's upstart cable channel and his wife's financial supporters.

AT first glance, it seemed the perfect fit: Bill Clinton, corporate reformer, signing on as a senior adviser (and "active adviser," according to a company press release) to the Yucaipa Corporate Initiatives Fund and the Yucaipa American Fund. Both get all their cash from pension funds from public—school teachers and government workers in California and New York state.

CALPERS, the huge California public—employee retirement fund, has agreed to commit $500 million to Yucaipa, and the California State Teachers Retirement System (CALSTRS) another $150 million. Millions more are to come from the New York State Common Retirement Fund.

Clinton's job, when he joined Yucaipa in April 2002, wasn't just to help make the rich richer: These were to be "investment funds that specialize in lower—income urban and rural communities," as The New York Times reported. Yucaipa managing partner Carlton Jenkins told Black Enterprise magazine that the funds were seeking out "urban—based minority or female—owned businesses."

There's much more, and I urge readers to look at the entire article.

But hypocrisy is only the start of the problems with this Yucaipa venture.

In California, the state's taxpayers stand behind the pension commitment to CALPERS beneficiaries. If the investments in risky ventures like Al Gore's Excellent Adventure Channel go belly—up, no harm will befall pensioners (except, of course, if they remain California taxpayers while collecting).

This is precisely analogous to the situation of the Savings and Loan industry in the 1980s. Federal guarantees underwrote risky real estate lending, and the natural result was excessive risk and outright corruption. Such gurantees which remove risk create what economists call a 'Moral Hazard.'

Regrettably, California's Democrat—dominated legislature is never going to investigate the Yucaipa situation. It deserves thorough scrutiny.

Hat tip: Ed Lasky

Thomas Lifson   1 29 06