Navajo Nation weathering Wall Street storm

Copyright © 2008
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Monday’s nearly 778 point plunge in the Dow Jones industrial average after the House rejected the government’s $700 billion bank-bailout plan has elevated investment concerns on the Navajo Nation.

The Budget and Finance Committee will meet Wednesday to “get an update on exactly the amount of dollars that the Nation was impacted and then get some general thoughts on what we could do,” Chairman LoRenzo Bates said Monday afternoon.

Controller Mark Grant and a representative from R.V. Kuhns, one of the Nation’s money managers, will be on hand to report to the committee.

“We’re not in a good situation, but I wouldn’t want to see the Nation pull its money out and put it under the mattress,” Bates said. “That contributes to going into a depression, and we don’t want that.”

Vice President Ben Shelly, former Budget and Finance chairman, said he and members of the former B&F committee will be leaving today to meet with Kuhns representatives, leaving Bates to question why.

“What’s the intention of the vice president going to visit our investors? If the president’s office has concerns and questions, protocol is that they work through their representative, which is Arbin Mitchell, and/or the president himself can call,” Bates said. Mitchell is a member of the Investment Committee.

“Given the fact that Budget and Finance is going to meet on Wednesday, why go visit these folks when we’re going to get a report? If the vice president and former B&F members are going, they have their own agenda that may not be in the best interest of Navajo.”

Bates said the current B&F Committee wasn’t invited by Shelly to go along, “and we wouldn’t go because it’s a Navajo Nation issue, it’s Navajo Nation money, and it needs to take place within Navajo.” He said Kuhns has confirmed they will have a representative at Wednesday’s meeting. In addition, Grant said all of the Nation’s money managers will be at a special session Oct. 15 to update the Navajo Nation Council on the Nation’s investments.

U.S. Rep. Tom Udall, D-N.M., voted Monday against the bailout package for America’s financial markets.

“I believe in strong action to help New Mexico’s middle-class families and to make our economy start producing jobs again. Unfortunately, today’s legislation provides too much to corporate executives, too little to homeowners, and nothing to ensure that Wall Street cannot repeat the mistakes that got us into this crisis,” he said.

U.S. Sen. Pete Domenici, R-N.M., expressed his disappointment with the House vote.

“This is very serious and we have to find a plan that Congress can accept. Doing nothing is not an option. This action will precipitate an economic catastrophe for America,” Domenici said.

Controller Grant was more optimistic.

“Today’s drop is just really a panic reaction to Congress, specifically the House, because they failed to pass the bailout and now everybody’s freaking out and they’re selling their stocks, and that’s exactly what you should not do in a down market.

“What we really need to do is grit our teeth and hang on, because it’s going to be a wild ride for a couple weeks. Markets need to get comfortable again.” Though the market value of the Nation’s portfolio has declined, he said, “We’re not going to lose money until we sell out our positions; and as long as I’m here, we’re not going to sell out our positions because when you do, you lock in the loss.

“It’s just like if we had a herd of cattle and the market price dropped $5. That is something that every Navajo understands. When the market price drops, you don’t see them running to the auction with their cattle. They hold back. They say, ‘Heck no, I’m not going to sell now. I’m going to wait for the price to come up.’ That’s where we’re at now.”

Grant said he has every confidence in the market because the Navajo Nation has a very diversified portfolio.

“We’re not dependent on the Wal-Marts of the world; we’re not dependent on General Motors. We’ve spread our investments over a range of stocks. The whole market will come back up and so will our portfolio,” Grant said.“We’ll show some reduction in market value because of that,” Grant said. “Tomorrow morning or tonight what we’ll do is we’ll pull up our investment reports that aggregate all of our investments and look at it to see what kind of impact today had on it. We won’t know that until late tomorrow or Wednesday.

“We’re not supposed to rely on history, but if we don’t study history we’re doomed to repeat the failures of the past. The Navajo Nation has a history of managing money. We’ve gone through several crashes already. The most recent one was the technology bubble in 2000. The market dropped pretty heavily at that time and the Nation took a big drop in market value, but we just stuck to our guns and the market came back up. It recovered and, in fact, it went beyond where it was before.
“This is something that is not fun to go through, but we’ve been through it before and we’re going to go through it again. I just want to reassure everyone that our investments are safe and I am very confident in the strategy that we have,” he said.