BP stock price drop hits state investment holdings: Pension systems, BWC portfolio have lost millions. [Dayton Daily News, Ohio]

July 05--COLUMBUS -- The BP oil spill and its resulting stock price plummet is the latest in a string of disasters taking a bite out of the state of Ohio's investment holdings.

The collapse of Lehman Brothers, the sale of Merrill Lynch, a federal bailout of insurance giant AIG and the federal take over of Freddie Mac and Fannie Mae collectively cost the five public pension systems $795.6 million, according to reports by the funds' directors to the Ohio Retirement Study Council.

The 54 percent decline in BP's stock price on the New York Stock Exchange cost the five pension systems $165.4 million in lost value and the Ohio Bureau of Workers' Compensation's portfolio lost another $11.6 million on BP stock since the April 20 rig explosion.

But the near collapse of Merrill Lynch and its eventual purchase by Bank of America tops the list of most recent Wall Street events that proved costly to the pension systems.

The exposure on Merrill Lynch stock cost the five systems roughly $481.6 million, the fund directors reported in September 2008.

Ohio's two largest pension funds are part of a federal class action lawsuit against Bank of America, saying it lied to investors about the purchase of Merrill Lynch.

Often, the losses are only on paper and are only realized if the stock is sold at a lower price than purchased. Investors can hang onto a hard-hit stock and see if it recovers.

The BWC lost $28.8 million on paper with its holdings in AIG, which slipped from trading at $64 a share in July 2007 to less than $7 a share in late 2008, said BWC spokeswoman Maria Smith. The stock is back up to $35 a share.

A year ago, the Ohio Retirement Study Council asked the pension systems how much exposure they had in the Bernard L. Madoff Investment Securities fraud.

The answer: none. That's one they hadn't suffered.

Contact this reporter at (614) 224-1624 or lbischoff@DaytonDailyNews.com.

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