The fundmaster

Black Enterprise, Oct, 1998 by Matthew S. Scott

McCall has just the right peculiar make-up to advance a fiscal activist agenda. The 63-year-old Boston native knows numbers well, having earned degrees from Dartmouth and the University of Edinburgh, as well as serving as a vice president for Citicorp/Citibank from 1985 to 1993. More than an accomplished numbers-cruncher, McCall is a well-seasoned political tactician, having served as a New York State senator and ambassador to the United Nations under President Jimmy Carter during the 1970s, and as a commissioner of the Port Authority of New York and New Jersey, the Commissioner of the New York State Division of Human Rights and as president of the New York City Board of Education during the 1980s. And to top it all off, in the great tradition of black civil rights activists, he is an ordained minister who's shown the ability to captivate audiences while weaving the flavor of scripture into many of his speeches on fiscal impropriety.

Under his leadership, the NYSCRF produced a 30.4% return last year and has an average 20% return over the last three years. By contrast, last year the Dow Jones industrial average grew by 22.6% and the Standard & Poor's 500 stock index jumped by 31%. While a great deal of the fund's success can be attributed to the incredible bull market of the last seven years, it's still very risky for pension funds to invest in equities. The California Public Employees' Retirement System (CalPERS) is the only other pension fund with assets over $100 billion (an estimated $140 billion). When the performance of the two funds was compared, the New York fund beat CalPERS on total return for 1997, 20.05% to 18.99%. "He's [McCall] done a magnificent job doubling the pension fund under his management," says New York State Retirement System Advisory Council member Stanley Hill, who also heads the American Federation of Sate and County Municipal Employees, DC 37 union. "He's been a great person for the position in terms of fiduciary responsibilities and social issues as well."

While Hill characterizes some of what the pension fund does as social in nature, McCall defends his actions as all business. In addition to investing billions of dollars in the stock market, "We're about making sound investments that pay off, but making them in our communities," says McCall. "There's a body of evidence that these types of investments can work, and the climate is right, particularly at a time when pension funds are doing well and making so much money."

FISCAL ACTIVISM AT WORK

In May of this year, when he discovered that the New York Business Development Corp. (NYBDC), a group the pension fund gives $100 million each year to make loans available to small businesses, wasn't making many loans to minority- and women-owned businesses, he sought to correct the situation with fiscal activist principles. He partnered with Carver Bancorp to jointly underwrite business loans for minorities and women (see "Carving a New Path," Newspoints, this issue). The wisdom of the move was obvious: Carver, ranked No. 1 on the BE BANKS list with $415.8 million in assets, had easy access to the minority community that was being underserved; NYBDC had extensive experience analyzing and underwriting loans. Working together, the risk of bad loans being approved would be minimal. "I think this is a win-win because we'll make money on the loans and it will be good for the community because these businesses will be growing and they'll be putting people to work," McCall says.