WASHINGTON – Municipal strategist George Friedlander and Citigroup, Inc. are parting ways on Oct. 5 after roughly four decades.
Friedlander, 68, most recently Citigroup's managing director of municipal macro policy and strategy, has been with the Wall Street firm since 1975 except for a brief stint with Morgan Stanley. He is leaving to pursue broader policy issues.
"I'm changing direction to writing more on the policy side. There's very, very little being written on the policy side in the municipal sector," he said in a brief interview. "To re-energize and want to do something a little different than market analysis is not surprising after forty one years."
"I will find a part time job or consulting perch from which to do this," he said, stressing he has no plans to retire for a number of years but would like to take a little time off and do some traveling.
Friedlander plans to speak on a panel at the Municipal Analysts Group of New York (MAGNY) on Oct. 14 on the implications of unfunded pension liabilities for muni issuers and investors.
"The linkage between the pension pressures and the budget capacity to pay for infrastructure is vast and severe," he said. New money issuance from 2011 to 2015 is down by 50% when compared to 2001 to 2010, when adjusted for inflation, Friedlander said. "Not adjusted for inflation, it's still down by 40%," he said.
Increasing pension pressures are contributing to this pattern of lower issuance and will continue to do so at an expanding rate, Friedlander said. State and local governments face a growing competition between paying down unfunded pension and OPEB (other post-employment benefit) liabilities and paying for infrastructure as well as basic governmental services. These are the kind of issues he wants to pursue.
When Friedlander started at Citigroup, he was assistant to its one credit analyst in municipal securities. He has since spent years serving as the Wall Street firm's chief municipal strategist.
He moved into public policy issues several years ago in strongly defending the tax exemption of municipal bonds and criticizing how the Joint Committee on Taxation calculates revenue losses from municipal bonds, which plays a major role in the passage of legislation. He has been front and center in the muni market's battle with the administration over its proposal to cap the value of tax-exempt bonds at 28% and in warning against legislative tax reform proposals that would curb or eliminate the tax exemption for municipal bonds.
Friedlander became particularly interested in broader policy issues about three and half years ago from conversations with attendees at a Bond Buyer conference and from reading books on the rapid growth of technology changes and its implications for cities.
"That's when I became re-energized," he said.
During the past year, he said, "I could see so many changes in the functioning of state and local governments and their relationships with each other and their relationships with the federal government, the pressures that are coming in the economy from technological changes.
"That's what I want to be looking at," he said, referring to technological changes, unfunded pension and OPEB liabilities and their impacts on states and localities.
"The whole way that cities function is going to change" from technological advances such as smart cars or cars that are leased for several hours at a time by individuals, Friedlander said.
There are other examples of technological changes, such as a 15 square mile area in New York City where the police are instantly alerted when and where any gun is fired, he said.
"These changes will impact urban planning and the urban experience. It's going to affect the way projects are funded," he said. Friedlander sees the use of more public-private partnerships to help finance projects because the private sector will likely be more up to speed than the public sector on technological changes.
He is also interested in health care. Actuarial assumptions about life expectancy do not take into account the increased use of monitoring, the use of genetics, or technological advances that will allow people to live longer after they retire, he said.
Friedlander has received many accolades over the years. He was ranked as one of the top three municipal strategists by Institutional Investor for 16 of the 18 years for which the publication had a Fixed Income All-America team. He has received awards from the Securities Industry and Financial Markets and its predecessor firms. He chairs the Technical Advisory Committee for the Municipal Bonds for America Coalition. Friedlander received the Lifetime Achievement Award in a poll of institutional investors by Smith's Research and Gradings in 2011. He was voted the National Federation of Municipal Analysts' Analyst of the Year in 1989.
He has a BS in Math from the State University at Stony Brook and an MBA with Distinction in Finance from Pace University.
