Former Rhode Island General Treasurer Frank Caprio showed a deft touch when he kicked off his campaign for State Treasurer at Caserta’s Pizza. This famous pizzeria is in the heart of the district where he has lived all his life, but, most importantly, where he met his wife, Gabriella, when she worked weekends in order to pay her college tuition. It’s nice to see a Harvard University graduate stay in touch with his roots.
In seeking election anew to the General Treasurer’s post where he served from 2007-2011, Mr. Caprio brings a series of successful accomplishments. Months before the subprime mortgage crisis hit in 2008, setting off a national market crisis, Caprio minimized state exposure to these asset-based securities. His move into safe investments allowed him to outshine the returns of such bellweather markers as Harvard University’s endowment, and the States of Massachusetts and California whose returns he left in the dust. To state that the investment environment which he faced during his tenure was in crisis is an understatement. Yet he was able to avoid the investment losses plaguing many states with his then fiscal “SWAT team” and prudent management.
Mr. Caprio doesn’t think too much of large investments in hedge funds with non-transparent fees. He thinks there are safer alternatives that mitigate risk with far less cost. He argues that these alternatives, including investment with private equity companies, also may not be necessary but certainly should be tried before any large investments in hedge funds with whopping fees. His vision is to look at the 30-40 year horizon which a state retirement system has to earn returns and that this factor of longevity should dictate prudent decisions.
The former treasurer came under some heat when he opined that the sub rosa fees paid to hedge managers in the present treasurer’s administration could be saved and , in large measure, applied toward the Cost of Living Adjustments(COLA) which have been suspended. He noted that the criticism of present General Treasurer Gina Raimondo by Ted Siedle had some merit. Mr. Siedle was able to ascertain the millions of dollars of fees paid to some of the very funds used by the present administration by checking other states who had insisted on transparency.
One of his democratic opponents has criticized Mr. Caprio for not foreseeing the pension problem and moving to abate the situation by proposing reform. The fact is that he did propose reforms, including the very foundation of the present system. Frank Caprio had the guts to make such a proposal since he was a lone wolf back in 2009 when he first brought up the need for reform. I looked back at a 3/13/09 column which I wrote praising his courage for vetting this issue and making reform proposals. In reality he was prescient.
In past columns I also praised him for his protection of taxpayers. In October 2009 my column pointed out the disgraceful management by the Board of Directors at the Central Landfill. Mr. Caprio called for the then-Attorney General, Patrick Lynch, to file an action against the directors’ liability insurance, some $5 million dollars, to compensate for the malfeasance of the board. Mr. Lynch refused to take this slam-dunk action or to appoint independent counsel to do so, since the Landfill Board had been his prior clients.
In sum, Mr. Caprio has proven experience and guts — a good combination in a candidate.