Harvard Financial Report (II)

After reading my last blog post, an alum in the financial world sent me this note, quoted by permission:

Isn't the bigger story that no one has been willing to take any responsibility for the mistakes and the overreaching that occurred in the past decade? Especially galling to me is the loss of institutional memory and the new paradigm that says nothing counts before 2010.

The alum is right, of course. Everything is about how we keep moving forward as we recover from the financial collapse at the end of the last decade; there is not a whisper about how we got into the mess in the first place.
Three years ago, Fred Abernathy and I wrote an op-ed for the Boston Globe highlighting what had happened. (Sorry that the full text is behind a paywall.)

IF AN ORDINARY corporation had the kind of fiscal year Harvard University just had, some of its directors would be gone. Long-term investments down $11 billion; another $1.8 billion lost by top management speculating with cash accounts; another half-billion gone in an untimely exit from a debt rate gambit. The institution left so illiquid that it was forced to sell assets and issue bonds at the worst possible time, just to pay the bills. A publicly held company would have experienced a shareholder rebellion - especially after the Globe reported that the chief investment officer had repeatedly warned the president about the risks he was taking with the institution's cash. …The Harvard Corporation is a dangerous anachronism. It failed its most basic fiduciary and moral responsibilities. Some of its members should resign. But the Corporation's problems are also structural. It is too small, too closed, and too secretive to be intensely self-critical, as any responsible board must be. Until the board can be restructured, the fellows should voluntarily share their power with the overseers. And Harvard should reveal the risks of its business plans, as would be required if it were a publicly held corporation. That exercise in transparency would surely serve Harvard well. 

There have been changes in the Corporation, but some of those who oversaw the meltdown are still there, including Robert Rubin. There is no more transparency now than there ever was.

If the reaction of the alum quoted above is representative of any general alumni sentiment, the capital campaign may be a tough sell.

And by the way, what would be the impact on the campaign, or on higher education generally, if charitable deductions are limited to $35,000 as the New York Times today suggests may be under consideration?