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The 5 Dumbest Things on Wall Street: July 8

1. Brown Backtracks

Apparently California Governor Jerry Brown would rather do business with the "street thugs" he knows than the devil he doesn't.

Despite suing State Street (STT - Get Report) in 2009 for "unconscionable fraud" when he was attorney general, Brown agreed late last week to a new three-year deal with the firm to handle all the custody work for the $232 billion California Public Employees' Retirement System, or Calpers. Calpers, which oversees the pensions of 1.6 million retirees in the Golden State, says the contract is worth about $5.7 million in annual revenue.

"It does seem contradictory," George Diehr, a Calpers board member representing state employees, said in a Bloomberg telephone interview.

No Duh Diehr! We have to wonder how bad the competing offers were from JPMorgan Chase (JPM - Get Report) and Bank of New York Mellon (BK - Get Report). They must have really bungled their bids for Calpers to select a company the state is currently suing for more than $200 million in damages.

Or Calpers could have just been supremely lazy and didn't want to deal with the paperwork, which is also not beyond the realm of reason when you are talking about Cali.

The suit alleges State Street violated the state's False Claims Act by overcharging Calpers and the California State Teachers' Retirement System, or Calstrs, by $56 million when pricing certain foreign-exchange transactions.

Back in October 2009, Brown wondered why more people were not angered by State Street's actions. He wrote on the Huffington Post at the time that "If street thugs were to hold up a convenience store and drive off with $1 million, it would be national news."

Who's the street thug now Jerry?

Oh that's right, it's the company watching your state's retirement money.

-- Written by Gregg Greenberg in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
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