Cities And States Paying Massive Secret Fees To Wall Street

California's report said $440 million. New Jersey's said $600 million. In Pennsylvania, the tally is $700 million. Those Wall Street fees paid by public workers' pension systems have kicked off an intensifying debate over whether such expenses are necessary. Now, a report from an industry-friendly source says those huge levies represent only a fraction of the true amounts being raked in by Wall Street firms from state and local governments.

"Less than one-half of the very substantial [private equity] costs incurred by U.S. pension funds are currently being disclosed," says the report from CEM, whose website says the financial analysis firm "serve(s) over 350 blue-chip corporate and government clients worldwide."

Currently, about 9 percent -- or $270 billion -- of America's $3 trillion public pension fund assets are invested in private equity firms. With the financial industry's standard 2 percent management fee, that quarter-trillion dollars generates roughly $5.4 billion in annual management fees for the private equity industry -- and that's not including additional "performance" fees paid on investment returns. If CEM's calculations are applied uniformly, it could mean taxpayers and retirees may actually be paying double -- more than $10 billion a year.

Public officials are overseeing this massive payout to Wall Street at the very moment many of those same officials are demanding big cuts to retirees' promised pension benefits.

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