Harvard Totally "Fucked" As Goldman Sachs Alum Flees
While people are focused on the AIG story and the Sarah Palin story in the August issue of Vanity Fair, there's actually something even more amazing in it—a Nina Munk piece on Harvard's endowment. It is only online in "preview" form, but we have something called a "subscription."
What's going on up at the old school? "Radical change is coming to Harvard. Fewer professors, for one thing. Fewer teaching assistants, janitors and support staff. Shuttered libraries." The list goes on. At Harvard! Which is, to quote a hedge fund manager who "counts Harvard among his investors," totally "fucked."
What went wrong, according to Munk? Ridiculous, ill-advised expansion in this decade, of 6.2 million square feet, at an outrageous, unbelievable cost of $4.3 billion. Also, their annual budget, which was $2.1 billion in 1998, was, ten years later, $3.5 billion. Spendy! Oh and also any student whose parents earn less than $180,000 a year pays no more than 10% of tuition.
Harvard's endowment was an astounding $36.9 billion one year ago. Its debt now is $6 billion, which, Munk calculates, means that Harvard must pay $517 million a year until 2038 to pay it off.
There is a barely-mentioned component of the piece, and it has to do with Edward Forst. Forst was, let's say, "graduated" from Goldman Sachs (which is to say, he went through a process of sudden promotion, with, most likely, a one-time extra-massive bonus, and then "left" the company). This is how Goldman Sachs moves on the people who need to be paid off for having done their heavy lifting—or how it gets rid of people it just doesn't want any more. Forst was elevated to co-head of the Investment Management Division at Goldman just back in November of 2007, and then left in 2008, "for" Harvard. He is in his late 40s.
Forst's title at Harvard was executive vice president. His job was to "help supervise the $34.9 billion endowment," wrote Bloomberg News at the time—and he was also to sit on the board of the Harvard Management Company. Now, with the endowment in ruins, he will leave Harvard in a few weeks. Everyone left behind is looking for someone to blame; Forst is slinking out quietly after something like a year on the job. Huh!
My heart bleeds magenta for them. Oh! Am I that transparent?
(If you get this, you are a nerd, but nobody here will get this I'm sure.)
Anything about Larry Summers in this piece?
I think it was Boston magazine that reported that a swap strategy that Larry suggested lost the university over $500 million. And that he urged them to leverage up throughout the bubble. Now the fathead is running the national economy!
Bonus points: Robert Rubin fought against the levering up at Harvard. He then joined Citi's board and was instrumental in getting them to lever up.
You can't keep these Harvard people down, they WILL huff and puff and blow you … r economy to pieces.
Can't Zuckerberg help them out?
My prediction is that after a generation or so Harvard will be theme park, where you can go to play with musty, disused books and laboratory glassware.
I don't have a subscription to the New Yorker so I'm not entirely sure what the point of the article is but just a few stray observations.
Forst wasn't in charge of the endowment. That job is Jane Mendillo's. Forst did sit on the board that ultimately oversees the endowment but he didn't join the board until after the endowment had already suffered major losses. This piece gives you a few suspects to be blamed for the endowment losses
http://www.nytimes.com/2008/03/28/business/worldbusiness/28iht-harvard.1.11495859.html
It is a little odd that he left after such a short stint – but I can't imagine it has anything to do with the endowment. He was probably just tired of making $200k a year.
Jane Mendillo was appointed July 1, 2008; she had gone off to Wesleyan for six years after many years of working for HMC. Haha, and he most certainly did not make $200K a year–that's what a Harvard PROFESSOR makes, nor was he concerned about that, since he walked off with certainly something in the tens of millions in one-year bonus money at GS. His reasons for going there, and for leaving there, were most certainly not financial.
Maybe they need to hit up their famous alumni like Method Man, Redman, Adrian Greneir, Rya O'Neil and Elle Woods. Or they can cut useless positions like Dr. Robert Langdon's.
Here's an interesting tidbit: go to the "Meet the Partners" page of of the Brynwood Partners website. These are the cheery folks who are closing the Stella D'oro plant in the Bronx.
Count the number of Harvard Business School grads – including the head honcho and his son (whom – BONUS POINTS – he named after himself with his most unfortunate name).
Tell me that place isn't a breeding ground for vultures.
Just deserves, my friends, just deserves.
Just deserves == pretty nice eggcorn.
Maybe Harvard's large endowment has begun its second act as a genetically gifted high school teacher. See: HBO's new series, Hung.
Maybe the Michael Jackson estate can bail them out.
For those of you that aspire to have a degree from Harvard, now's the time to plan your application strategy– provided that paying the full-cost of attending is part of it. Just check the box that says "not a candidate for financial aid" on the application. Expect to see substantial increases in enrollment numbers for at least the next 10 years– especially in the specialized Masters programs, and confusing opportunities to apply for different kinds of degrees (i.e. "MPA" and "MPP") in the same professional schools. The one with the larger class size will be for the full tuition-paying masses (and borrowers) and this group will attend class but be ignored. Your colleagues in the other smaller "more elite" group will be composed of the traditionally pampered pusses of the world, and they will work directly with the faculty on their joint research projects.
Praise be to David Swensen!
Harvard comes knocking?
http://www.whitenationalism.com/ms/ms-49.htm