Yeshiva U. Board's Culture of Risk-Taking Led to $500M Meltdown

Jewish Channel Probe Finds Madoff Losses Tip of Iceberg


By Paul Berger

Published June 18, 2014.
  • Print
  • Share Share

A culture of high risk-taking among Yeshiva University trustees resulted in Y.U.’s investment portfolio losing more than $500 million in the 2008 financial crisis, according to a two-year investigation by TakePart in association with The Jewish Channel.

The investigation also found that since the crisis, Y.U. has spent down reserves and borrowed heavily even as the university has faced mounting operating deficits.

Today, Modern Orthodoxy’s flagship institution faces its biggest fiscal crisis in more than 30 years. The university has more than $500 million in debt, according to the bond ratings agency Moody’s, which recently downgraded Y.U.’s debt to junk status. Earlier this year, Y.U. sold ten buildings for $72 million. In May, Y.U. was forced to cede control of its flagship medical school, the Albert Einstein College of Medicine, to Montefiore Medical Center.

According to The Jewish Channel, much of Y.U.’s financial woes are of its own making.

Y.U.’s trustees liquidated most of the university’s low-risk Treasury bonds following a change of leadership in 2003. Instead, trustees poured hundreds of millions of dollars into high-risk investments.

Y.U.’s losses to Bernard Madoff, who ran a Ponzi scheme until it collapsed at the end of 2008, are often blamed for its fiscal crisis; those losses amounted to an estimated $100 million. But by the time of the national recession earlier that year, 80% of Y.U.’s portfolio was in high-risk stocks and hedge funds — a riskier investment strategy than just about every college in America, the channel reported. As a result, the school’s investments plummeted by $525 million between 2007 and 2009.

The high-risk strategy was overseen by Richard Joel, Y.U.’s president since 2003, and Morry Weiss, chairman of Y.U.’s board since 2004, the Jewish Channel reported. The strategy was led by Y.U. board members from the hedge fund world, who treated the school’s investment policy as if it were a hedge fund.

Board members, particularly investment committee members, also had frequent conflicts of interest because their firms regularly conducted business with Y.U., the channel reported.

The channel’s investigation, conducted with TakePart, a digital news and lifestyle magazine, also found that Y.U. has borrowed heavily to finance and expand the university’s schools. Between 2001 and 2008 spending at the school increased by 68%, even as revenues rose by only 25%.

During the past six years, as Y.U. has struggled through operating losses of tens of millions of dollars, spending has risen by 33%, according to the channel.

Y.U. rejected the report’s conclusions in a statement.

“It’s unfortunate that Yeshiva University wasn’t given sufficient opportunity to react to the TakePart article, which is full of half-truths and inaccuracies from as far back as a decade ago,” the statement said. “The writer, who admits that he has an axe to grind with YU, claims to have worked on the article for two years, but contacted YU less than two days before publication, presented limited information that he planned to report and ignored most of what he was provided. Given the poor quality of this article apparently written for no purpose other than to damage YU, we will remain focused on the future and have no further comment on this matter, other than to share that YU has invested in its core, our students and faculty, with great results, and will continue to do so. Today, YU’s investment portfolio is strong and professionally managed by our investment office with careful board oversight and best-in-class conflict of interest policies in place.”

Contact Paul Berger at berger@forward.com or on Twitter @pdberger


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • The sign reads: “Dogs are allowed in this establishment but Zionists are not under any circumstances.”
  • Is Twitter Israel's new worst enemy?
  • More than 50 former Israeli soldiers have refused to serve in the current ground operation in #Gaza.
  • "My wife and I are both half-Jewish. Both of us very much felt and feel American first and Jewish second. We are currently debating whether we should send our daughter to a Jewish pre-K and kindergarten program or to a public one. Pros? Give her a Jewish community and identity that she could build on throughout her life. Cons? Costs a lot of money; She will enter school with the idea that being Jewish makes her different somehow instead of something that you do after or in addition to regular school. Maybe a Shabbat sing-along would be enough?"
  • Undeterred by the conflict, 24 Jews participated in the first ever Jewish National Fund— JDate singles trip to Israel. Translation: Jews age 30 to 45 travelled to Israel to get it on in the sun, with a side of hummus.
  • "It pains and shocks me to say this, but here goes: My father was right all along. He always told me, as I spouted liberal talking points at the Shabbos table and challenged his hawkish views on Israel and the Palestinians to his unending chagrin, that I would one day change my tune." Have you had a similar experience?
  • "'What’s this, mommy?' she asked, while pulling at the purple sleeve to unwrap this mysterious little gift mom keeps hidden in the inside pocket of her bag. Oh boy, how do I answer?"
  • "I fear that we are witnessing the end of politics in the Israeli-Palestinian conflict. I see no possibility for resolution right now. I look into the future and see only a void." What do you think?
  • Not a gazillionaire? Take the "poor door."
  • "We will do what we must to protect our people. We have that right. We are not less deserving of life and quiet than anyone else. No more apologies."
  • "Woody Allen should have quit while he was ahead." Ezra Glinter's review of "Magic in the Moonlight": http://jd.fo/f4Q1Q
  • Jon Stewart responds to his critics: “Look, obviously there are many strong opinions on this. But just merely mentioning Israel or questioning in any way the effectiveness or humanity of Israel’s policies is not the same thing as being pro-Hamas.”
  • "My bat mitzvah party took place in our living room. There were only a few Jewish kids there, and only one from my Sunday school class. She sat in the corner, wearing the right clothes, asking her mom when they could go." The latest in our Promised Lands series — what state should we visit next?
  • Former Israeli National Security Advisor Yaakov Amidror: “A cease-fire will mean that anytime Hamas wants to fight it can. Occupation of Gaza will bring longer-term quiet, but the price will be very high.” What do you think?
  • Should couples sign a pre-pregnancy contract, outlining how caring for the infant will be equally divided between the two parties involved? Just think of it as a ketubah for expectant parents:
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.