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How the geniuses running Harvard pissed away $1.8B in cash

boston.com — The warnings fell on deaf ears, under Summers’s regime and beyond. And when the market crashed in the fall of 2008, Harvard would pay dearly, as $1.8 billion in cash simply vanished. Indeed, it is still paying, in the form of tighter budgets, deferred expansion plans, and big interest payments on bonds issued to cover the losses.

Who dugg this? Made popular Nov 30, 2009

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  • aralls, on 11/30/2009, -2/+83Harvard still has $26 billion in its endowment; I won't shed too many tears for it tonight.
  • przemeklach, on 11/30/2009, -7/+84Didn't Harvard produce most of the people that caused this financial mess in the first place? It's not suprising that this happened then, is it.
  • ScienceDoc, on 11/29/2009, -5/+63The people at Harvard are rich and legacies...they don't have to be smart...
  • Megor, on 11/30/2009, -5/+51All the "Elite" schools are for the rich, I've met so many people from these universities that have no clue what they are doing.
  • DaviDTC, on 11/30/2009, -3/+32Lawrence Summers, the guy in the story who ***** up, is the Director of the White House's National Economic Council for Obama.
  • parabola9, on 11/30/2009, -0/+26They're borrowing to replace money that disappeared, even though they have $26 billion left?

    That doesn't seem like a great idea, but I didn't go to Harvard so what do I know.
  • GregLoire, on 11/30/2009, -2/+22Peter: Look, there's Harvard.
    Pope: That's just a barn.
    Peter: Ooh, someone went to Yale.
  • stevenb337, on 11/30/2009, -11/+30So... They fire a financial genius (Lawrence Summers) for saying that women aren't as good at math, replace him with a woman (Drew Faust), and she loses 27% of Harvard's endowment and general operating cash? Ironic, isn't it, that Political Correctness and the opposite of "academic freedom" cost Harvard approximately $11.5 Billion.
  • geodebug, on 11/30/2009, -0/+17"Even with the losses, Rothenberg said, the cash strategy has earned Harvard returns averaging 8.9 percent over the past 10 years. He and other university officials say the cash pool is still ahead of where it would have been, if invested more conservatively all along. But no one could be specific about what that net gain has been."

    9% growth over 10 years even after the crash is pretty good if you asked me. They gambled, made a ton of money, but didn't get out in time like a lot of companies, and only made a pile of money. It sounds like the worst offense of the "Summers" policy was investing too much of the operating cash.
  • danfrnz, on 11/30/2009, -11/+27collage makes you more smarter.
  • filolif, on 11/30/2009, -1/+17If this story was about endangered African Parrots, I imagine you'd express your concern over how Obama and Conan were handling Parrot issues too.

    You ***** idiot.
  • danfrnz, on 11/30/2009, -2/+17I'll bite.
    What would that be? Specifically.
  • seearees, on 11/30/2009, -0/+15whoosh
  • Meninite, on 11/30/2009, -1/+15If you take a look at the graph provided, the cash fund is still a bit above where it was in 2003. The graph for Harvard's cash fund is a reflection of the economy during that period: slow growth from 1999-2003, followed by rapid growth as the bubble economy took off. The drop off in 2009 is part of the normal correction the rest of the economy is experiencing. Attributing the fall off to Lawrence Summers seems like a major stretch to me considering his administration ended in 2006.

    That said, Summers is an academic economist who believes he understands of the economy on a large scale. That makes him a dangerous man. Summers' contribution to the post Soviet collapse of Russia's economy is well documented in the book "Globalization and Its Discontents" by the Nobel prize winning economist Joeseph Stiglitz.
  • inactive, on 11/30/2009, -0/+12What an Ivy league degree actually means to an employer (in descending probability):

    1. You are so deep in student loans that you have to find and keep a job for at least 20 years. So you are a good hire if they want to reduce their turnover.
    2. Your parents are rich and you have some good connections
    3. You are exceptionally qualified for a position because the person hiring you also went to an Ivy league school and thinks it means something.

    4. (rarely) You are actually smart AND 1 or 2.
  • Konnnan, on 11/30/2009, -0/+11question remains. What is being done at the white house now?
  • digitalArtform, on 11/30/2009, -2/+13Meanwhile Bush went to Yale
  • jdmulloy, on 11/30/2009, -3/+12I feel really bad for Harvard with it's $26 Billion in endowments, really I do. People who attend and graduate from Harvard aren't nearly as special as they'd like to think they are.
  • DangQuesadilla, on 11/30/2009, -2/+10SO TRUE
  • vpshockwave, on 11/30/2009, -6/+13You accidentally a word.
  • Elranzer, on 11/30/2009, -0/+7George W Bush went to both Harvard and Yale... that should speak volumes on how worthless Ivy League education is.
  • chill1217, on 11/30/2009, -1/+7no he didn't...
  • blumarlin1, on 11/30/2009, -1/+7I'm guessing he forgot the /s
  • JanTik, on 11/30/2009, -3/+8It's the age old flaw humans always seem to exhibit: our fundamental inability to be self-critical. No matter how smart we are, we don't know everything AND we can't see the future. Like someone put it so succinctly, "Those who are most sure they have heard God speak are safely behind bars."
  • cr0c0dile76, on 11/30/2009, -0/+5So Harvard lost 1.8 billion of its 6 billion cash which it apparently didn't need anyways since it was 100 percent invested. Wooh Time for layoffs!
  • roodammy44, on 11/30/2009, -0/+5Kind of makes you sad that they're our overlords, and that people's main measure of success is their bank account :-(
  • dsmx, on 11/30/2009, -1/+5To quote my university professor academics couldn't organise a piss up at a brewery.
  • inactive, on 11/30/2009, -0/+4Buried for partisan *****.

    Or are you a Yale man, like Ol' Bushie?

    Collegiate rivalry is even more pointless.
  • busket, on 11/30/2009, -1/+4Yep. Political Correctness and the opposite of "academic freedom" are responsible. It's definitely not the global economic recession.
  • JanTik, on 11/30/2009, -0/+3/superfluous
  • inactive, on 11/30/2009, -1/+2And still ***** things up. I see what you did there.
  • eRaptor, on 12/01/2009, -0/+1Considering their financial acumen, they'll soon just be legacies.

    "Rich" is an adjective reserved for those who retain their wealth.
  • FoodTiger, on 11/30/2009, -0/+1i know harvard man, he say put on shirt before i order mcnugget and small fry
  • 20ox02, on 12/01/2009, -0/+1Tremendously arrogant financial bully, "elite" six-member board, members of financial staff, professors on advisory committees, and the board, all useless in their role and their stewardship. Financial leaders such as Summers are incompetent bullies who use financial voodoo to cast a spell over people who should take it upon themselves to know finance and take upon themselves to remain vocal independent voices in the face of arrogance and hubris. It is the essence of boards, to challenge thought and not let leadership go unchecked. However, we continue to reward people the ilk of Summers with jobs guiding and shaping Federal financial policy. He is an example of why we are in this trouble. I have zero empathy for Harvard.
  • Craigistired, on 11/30/2009, -0/+1You mean the "geniuses"?
  • ikzeidegek, on 11/30/2009, -0/+1Your comment is right on target. There is a tradeoff between expected return and risk when investing. Summers chose for high expected return, which is the best strategy if you can ride out the short term bumps in the market.
    A 30 year old should try invest 401(K) money in a way to maximize expected return because the time horizon is long. Harvard's time horizon is also long.
  • JustLoren, on 11/30/2009, -0/+1Did you read the article? Summers warned Harvard that the cash account needed to be re-evaluated. I don't think the article was blaming Summers...
  • spyderfreek2k, on 11/30/2009, -0/+1The reason for this is simply a matter of interest. 26 Billion makes interest on 26 Billion. They use this interest to pay bills, salaries, bribes, cover-ups, bj's, and for strippers at the office "holiday" party.

    Dont have the interest to pay those bills? Going to take a loan to cover so not to deplete an endowment. Chances are, endowment funds can also only be used in a certain way.
  • spyderfreek2k, on 11/30/2009, -0/+1<Wrong Button>
  • stevenb337, on 11/30/2009, -0/+1And I bet you're one of those guys who never reallocates your 401k.
  • diggitrox, on 11/30/2009, -0/+1How no one else on the planet feels bad about this.
  • shonu9, on 11/30/2009, -1/+1who cares? Harvard has become the dancing slave of rich people's tip..
  • TheFurnace, on 11/30/2009, -1/+1they aren't failures, and I dare you to name an instance that they were. This article mentions that he left in 2006, and although they lost cash in the mean time, they gained 9% on average each year over the last decade. Doesn't sound like much of a failure to me.
  • Elranzer, on 11/30/2009, -2/+1Thankfully, that Harvard "genius" (and also a Yale alumnus) was booted out of the White House on January 29th, 2009.
  • Vesuvias, on 11/30/2009, -3/+1Go CAL Bears... this being just one place to get a REAL education... plus it was fun being the more conservative type in the land of libs.
  • BerateBirthers, on 11/30/2009, -4/+1You just don't understand them.
  • mjoe, on 11/30/2009, -12/+9that's pocket change to Harvard
  • zerton, on 11/30/2009, -12/+9Basically the smartest people in the world don't know what the ***** is up with the economy. Enlightening.
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