Wednesday, September 24, 2008

Brethren Benefit Trust issues statement on financial crisis, investments.

Brethren Benefit Trust (BBT) has issued a statement in response to the current turmoil in the financial markets. BBT is the financial services ministry of the Church of the Brethren. Its ministries include the Brethren Pension Plan, and BBT also houses the Brethren Foundation that provides investment management services to churches, agencies, and others.

BBT reported that it contacted each of its investment managers early last week regarding their Brethren Pension Plan and Brethren Foundation holdings. Of BBT’s two bond managers, Income Research and Management had 0.9 percent of its portfolio in Lehman Brothers, 1.2 percent in AIG, and 0.4 percent in Merrill Lynch. Agincourt Capital Management had 0.6 percent of its portfolio in Lehman Brothers, 0.46 percent in Merrill Lynch, and no holdings in AIG. None of BBT’s four equities managers nor its short-term fund manager had investments in Lehman Brothers, AIG, or Merrill Lynch.

"Although many questions remain unanswered with regard to the government’s proposed bailout and the impact it will have if approved, many factors are expected to influence investment performance over the entire year--issues like Fannie Mae and Freddie Mac having been nationalized, and the number of banks that have been taken over by the FDIC," the statement said in part.

"There is still a significant volume of over-leveraged entities with toxic assets in the markets," the statement continued. "It is likely that the cycle is not finished, but it is necessary to clean up the excesses--a positive step in a rational restructuring of markets and asset prices. The critical question, however, is to what extent the declines in financial assets will have direct impact on the real economy. This transmission risk is material, and we expect at least some negative implications for Gross Domestic Product growth as it is unlikely that a material improvement in the economy will be seen without a healthier financial sector."

In the meantime, BBT is continuing to work closely with its investment managers, and is reassuring Brethren that those managers remain diligent in their efforts to make prudent decisions with the assets they manage on behalf of Brethren Pension Plan members and Brethren Foundation clients.

About the financial situation of the Church of the Brethren Credit Union, BBT said that "ideally, nearly all of the money that Church of the Brethren Credit Union manages is invested in the form of auto and personal loans to members. In times when the Credit Union has excess liquidity, funds are invested in Certificates of Deposit. These investments are always less than $100,000 per financial institution, which means funds are always fully insured by the National Credit Union Association. Thus, the Church of the Brethren Credit Union is not directly impacted by the national financial crisis."

The full statement will be available at To discuss BBT’s investments further call 800-746-1505, ext. 385 for Pension Plan members, or call ext. 369 for Foundation clients. "We welcome your call," BBT staff said.

Source: 9/24/2008 Newsline

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