The Executive Committee of CSU-ERFSA has voted to oppose Assembly Bill 386. This bill, if passed in its present form, would give CalPERS the authority to make direct loans to individuals and businesses without public disclosure of the names of the borrowers.

Currently, CalPERS is able to participate in the loan market through agreements with venture capital funds. However, CalPERS would be able to receive higher yields by lending directly to potential borrowers. The venture capital funds do not have to disclose the names of their borrowers, but because they usually have their own funds invested in these loans as well - due diligence with regard to the credit-worthiness of the borrowers usually is assured.

Owing to recent financial scandals involving CalPERS staff, concerns have been raised about granting CalPERS the authority to make direct loans without having to disclose the names of the borrowers. Both the Retired Public Employees Assocation (RPEA) and the California State Retires (CSR) have come out in opposition to AB 386 in its present form as has CalMatters columnist Dan Walters and the Santa Rosa Press Democrat editorial board.

Dan Walters column on the subject outlines the issues involved in detail, and is well-worth reading.

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