Saw this coming… in the end we will find out some savvy investors were in on this with the banks all along.

Reuters-

As Richmond, California, moves forward with a plan to help struggling homeowners by using its power of eminent domain to seize underwater mortgages, the list of those concerned about it is growing – and now includes the pension fund for many of the very same city workers pushing the plan.

The $268 billion California Public Employees’ Retirement System, the nation’s largest public pension fund, joins banks and other investors in worrying that Richmond’s plan will undermine the value of its holdings.

Calpers holds about $11 billion in income-producing mortgage-backed securities, though it calculates it has just $27,000 in exposure to mortgages targeted by Richmond.

“We are sympathetic to homeowners but as fiduciaries our focus must be in the best interests of our members,” Calpers spokesman Joe DeAnda told Reuters in the fund’s first public statement on Richmond’s plan. “We are watching the issue closely and have some concerns about the precedent this may set and the impact to investors.”

[REUTERS]