Monday, June 8, 2009
The Wall Street Journal published a weekend interview of Yale President Richard Levin, whose 16-year tenure has seen both the much celebrated "Yale model" for endowment investing and a 25 percent drop in endowment value over the past year. While still defending the investment model, he acknowledges that liquidity is the unanticipated problem created by the recent sharp downturn. As mentioned in the interview and recently reported by Bloomberg, this has led many schools that depend on endowment income to tap the bond markets for billions of dollars. Mr. Levin also noted at least one silver lining to the recent drop in endowment values - it has provided a strong rejoinder to calls from Congress for schools with large endowments to increase payout rates.
(Hat tip: Tax Prof Blog)