The banks, layoffs & growing fightback

On June 4, during Commencement Day 2009 at Harvard University—the richest university in the world—graduating students held up signs spelling “N-O L-A-Y-O-F-F-S” inside, while workers on the outside held up the same signs.

For months leading up to commencement, a loose coalition of Harvard students and unions has been protesting layoffs at the university. Comprised of members of the No Layoffs Campaign—started by members of the Harvard Union of Clerical and Technical Workers, American Federation of State, County and Municipal Employees Local 3650; UNITE/HERE; Service Employees union Local 615; Student Labor Action Movement; and other student activists—this grouping has held rallies, marches and forums demanding no layoffs and no cuts in services.

The campaign has been working hard to expose the fact that Harvard is being run as a financial institution, not a nonprofit educational institution. Dictating the layoffs is the Harvard Corporation, an entity dating from 1650 that now includes representatives from both Citigroup and Goldman Sachs.

Edward C. Forst, global head of the Investment Management Division of Goldman Sachs, was appointed in June 2008 to be Harvard’s first executive vice president. He became senior advisor to the president of Harvard, Drew Faust, and a member of the Harvard Management Corporation (HMC)—the group which manages the school’s endowment fund. That fund hit a high of $36.9 billion last year–the world’s largest development fund, which is as big as the combined gross domestic products of several countries. Forst will step down in August but will remain as an advisor and a member on several Harvard finance committees.

Another big player in the Corporation is Robert E. Rubin, former U.S. Secretary of the Treasury and a former leader at Citigroup and Goldman Sachs before that. These are the same banks and executives who, through wild, fraudulent speculation, caused millions of poor and working people to lose their homes or be evicted. Rubin was purportedly an architect of this strategy at Citigroup. Both banks were recipients of billions of dollars in bailout money. Goldman Sachs received $45 million alone.

Such big-business money managers are now running the show at Harvard, and have been using the endowment fund, which is supposed to be for educational services, as a huge slush fund. A revealing March 16 article in Forbes Magazine describes how Harvard was investing endowment money in exotic financial instruments that began to backfire on them. Wall Street giants like J.P. Morgan and Goldman Sachs were demanding more collateral.

According to Forbes: “Desperate for cash, Harvard Management went to outside money managers begging for a return of money it had expected to keep parked away for a long time. It tried to sell off illiquid stakes in private equity partnerships but couldn’t get a decent price. It unloaded two-thirds of a $2.9 billion stock portfolio into a falling market. And now, in the last phase of the cash-raising panic, the university is borrowing money, much like a homeowner who takes out a second mortgage in order to pay off credit card bills.”

The Forbes article talks about Jack Meyer, who headed the university endowment fund under President Lawrence Summers until 2005. “Meyer built a Wall Street-like trading operation and managed most of HMC’s money in-house. It looked like a giant hedge fund, and it had paychecks to match. A high-level HMC manager would make as much as $35 million in good years.”

The result has been a 30 percent drop in the endowment, with a loss of $11 billion and about $550 million in income. Shortly after Faust’s announcement of this over the winter, a hiring freeze was implemented at the Faculty of Arts and Sciences, the largest division at Harvard, as well as a salary freeze for faculty and other “exempt” staff.

Layoffs or threats of layoffs began among the maintenance workers and workers at the libraries and in the dining halls. This was seen by many workers and student activists as the Corporation taking their losses off on the backs of the workers. Harvard began crying poor at meetings, in emails and in articles in an effort to convince the Harvard workers and students that cuts and layoffs were necessary, when in reality they were needed to preserve profits and cut losses. There is still $25.9 billion in the endowment fund!

The workers–immigrants, women, single mothers, people of color who clean the offices and laboratories; who cook the food that feeds the students; who type, file and answer phones—have been joined by class-conscious students in declaring together: No layoffs, no cutbacks! Education is a right! No, we will not pay for your crisis! Harvard has the money! This is an educational institution, not a financial empire!

When the Corporation recently told UNITE/HERE that there would be layoffs and an elimination of hot breakfasts for students, 350 angry workers turned out that night at shift change and marched through Harvard Yard and into Harvard Square ready to fight back.

The battle has just begun. This coalition of workers, students and the community needs to be strengthened and broadened in order to kick out the banks that are feeding like greedy pigs at a trough.

Eckfeldt is a member of the Harvard Union of Clerical and Technical Workers. Childs is a UNITE/HERE chief shop steward, representing dining hall workers at Harvard.