After Record Loss, Harvard Names A New Chief Risk Officer

(January 14, 2010) — Neil Mason, 43, of FRM Capital Advisors, is the new chief risk officer of Harvard University’s endowment-management company, which suffered a record loss last year.

Harvard’s endowment dropped 30% to $26 billion in the year ended June 30, 2009, as investments declined 27%. The university’s loss of billions of dollars was largely due to issues with its private-equity and hedge fund portfolios, leading to cost cuts, a halt on campus expansion, and a review of how it manages and allocates its assets.

Mason will report to Harvard Management Co. Chief Executive Officer Jane Mendillo. He succeeds Daniel Kelly, who started as the university’s chief risk officer in 2005 and joined Union Bancaire Privée last year.

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“We are confident that Neil will be highly effective as we continue to refine the endowment’s risk profile to ensure that it can support the growth and plans of the University over the long term,” Mendillo said in a statement.

Mason earned degrees in philosophy, politics, and economics from Oxford University, and has more than two decades of risk-management and markets experience in banking and hedge funds, Bloomberg reports. He has worked previously at BlueCrest Capital Management Limited as chief executive, in charge of the firm’s risk management.

To contact the <em>aiCIO</em> editor of this story: Kristopher McDaniel at <a href='mailto:kmcdaniel@assetinternational.com'>kmcdaniel@assetinternational.com</a>

During the first day of testimony before the FCIC, bank bosses were both apologetic and defensive, at one point claiming that institutional investors who dealt with them were professionals and should be responsible for their actions.

(January 14, 2010) – In fiery testimony on day one of the Financial Crisis Inquiry Committee (FCIC), Goldman Sachs’ CEO Lloyd Blankfein stated that institutional investors were responsible for taking the bad sides of mortgage bets as the crisis reached its apogee.

While admitting changes were necessary – “Anyone who says ‘I wouldn’t change a thing’, I think, is crazy,” – Blankfein stated, in the opening morning’s session, that investors who bought mortgage-backed securities (MBS) and other securitized assets from Goldman while other sections of the bank were simultaneously shorting the same instruments were “professional investors who want[ed] this exposure.”

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FCIC Chairman Phil Angelides, who was once the Chairman of the nation’s largest pension fund, the California Public Employees Retirement System (CalPERS), had a retort: “It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”

The FCIC has a mandate to investigate the financial crisis and make recommendations to Congress on how to avoid such problems in the future. The Commission mirrors that seen following the great Depression — the New Deal’s Pecora Investigation – which indirectly led to the passage of the Glass-Steagall Act and the Securities Exchange Act. The report is expected by December 15, 2010, and hearings will continue throughout the year.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742