The fun never stops around here. Yesterday, we noted the rampant conflict of interest that Summers works under. The latest brick thrown thru the glass that was Larry Summers reputation: His oversight of the Harvard endowment:
“Back in 2002, a new employee of Harvard University’s endowment manager named Iris Mack wrote a letter to the school’s president, Lawrence Summers, that would ultimately get her fired.
In the letter, dated May 12 of that year, Mack told Summers that she was “deeply troubled and surprised” by things she had seen in her new job as a quantitative analyst at Harvard Management Co.
She would go on to say, in later e-mails and conversations, that she felt the endowment was taking on too much risk in derivatives investments, and that she suspected some of her colleagues were engaging in insider trading, according to a separate letter written by her lawyer that summarized the correspondence.
On July 2 Mack was fired. But six years later, the kinds of investments she allegedly warned about did blow up on Harvard. The endowment plunged 22 percent last summer, in part due to the collapse of the credit markets. As a result, the school is cutting costs and under criticism that it took on too much risk in its investment portfolio.”
As bad as that is, it gets worse: Despite of the confidential nature of the letter, Summers apparently forwarded the letter to her boss. She was fired soon after
Harvard’s endowment is down 40% since late 2007 — and that’s not counting its private equity investments, some of which are being shopped at 40 – 60% off listed value.
As far as Harvard is concerned, Larry Summers seems to be the gift that keeps on giving . . .
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Previously:
Harvard: Not So Smart After All (December 2008)
http://www.ritholtz.com/blog/2008/12/harvard-not-so-smart-after-all/
Source:
Ex-employee says she warned Harvard of risky moves
Endowment staffer fired after letter to president
Beth Healy
Boston Globe, April 3, 2009
http://www.boston.com/business/articles/2009/04/03/ex_employee_says_she_warned_harvard_of_risky_moves/
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