How Israel Bonds Became A Local Campaign Litmus Test

By Greg David, The City

July 22, 2025, 2:22 p.m.

The seemingly endless squabbling between Mayor Eric Adams and Comptroller Brad Lander has now reached the esoteric issue of the city’s pension funds’ recent selloff of Israeli government bonds.

The issue burst into public view earlier this month after First Deputy Mayor Randy Mastro sent a letter to Lander demanding a full accounting of why the comptroller’s office did not reinvest in State of Israel bonds as they matured.

”This divestment, occurring amid a global ‘Boycott, Divestment and Sanctions (BDS)’ campaign against Israel, appears to be in furtherance of that BDS campaign, regardless of the adverse financial consequences for city pensioners,” Mastro pointedly wrote, adding that the action raised questions about whether Lander followed his fiduciary duty.

The comptroller replies that he’s not singling out Israel — and that Mastro simply doesn’t understand the obligations of the funds and how the city sets policies on which bonds to buy.

The clash comes as Adams is running for reelection as an independent on the EndAntiSemitism ballot line while fending off Democratic mayoral nominee Zohran Mamdani, a close ally of Lander’s and vocal critic of Israel, in the general election.

Comptroller Brad Lander speaks about his endorsement from Peter and Daniel Arbeeny outside the Cobble Hill nursing home where their father died early in the Covid pandemic, June 16, 2025. Credit: Ben Fractenberg/THE CITY

The city has held Israel government bonds since the 1970s, and the instruments date back to the early 1950s, when the fledgling Jewish state sought financing. Investing in the bonds became a point of pride for many U.S. Jews. The current state of the city’s Israel bond holdings first surfaced on the Democratic primary for comptroller when Mark Levine, the Manhattan borough president, said he would buy State of Israel bonds if elected. (Lander, after losing the Democratic primary for mayor, is not eligible to run for reelection.)

The move served to put the spotlight on Levine’s main rival, City Council member Justin Brannan (D-Brooklyn), who had been endorsed by progressive groups critical of Israel. Brannan short-circuited the effort during their second debate, co-hosted by THE CITY, when he surprised Levine by saying that he, too, would buy Israel government bonds.

Then came Mastro’s confrontational letter. The amounts involved are tiny — no more than $30 million of the city’s pension funds total assets of $289 billion—and involve wonky decisions on what bonds to buy.

Lander says that when he took office four years ago he discovered that some $30 million in Israeli bonds had been purchased not by the managers who oversee long-term bonds but by what is called the “short term” managers, who are supposed to be buying assets that are paid off within a year.

Lander declines to speculate on why previous comptrollers proceeded that way. However, by having the short-term desk buy the bonds avoided the need to ask the pension trustees whether they would approve Israel bonds. The trustees of the city’s five pension funds, who are appointed by the comptroller, mayor and the unions who represent the workers, have the final say over investments.

He also discovered that the city did not own any other foreign government bonds, known as sovereign debt.

“When you are looking for the lowest risk you invest in U.S. government treasuries and when you want a greater rate of return you invest in corporate securities and mortgage-backed securities,” he said.

So he decided not to reinvest as the bonds were paid off. The fund, meanwhile, still has $315 million invested in stocks of Israeli companies and real estate in Israel.

“Adams and Mastro are asking the pension fund to treat Israel better than other countries and that’s inconsistent with my duties,” he said.

The mayor’s office continues to insist the city should buy the bonds.

“Israel is not just the world’s only Jewish state — it’s a vital economic partner to both our country and our city. Ever since 1974, when then-Comptroller Harrison Goldin invested in Israeli bonds, all subsequent comptrollers have reinvested in this safe investment instrument, which has provided for New Yorkers,” said Press Secretary Kayla Mamelak Altus in a statement to THE CITY. “This isn’t about politics — it’s about dollars and sense.”

State Comptroller Tom DiNapoli, who unlike Lander has sole power over state pension funds, has made the opposite decision.

The state pension fund owns $340 million he has purchased in Israeli bonds, which is 50% more than the total of $229 million in all other foreign government bonds in its portfolio.

“Israel bonds have provided a safe and steady return for our funds,” said DiNapoli spokesperson Mark Johnson. “Israel bonds have offered the fund an attractive yield for the strong credit rating compared to their publicly issued sovereign counterparts.”

The state pension fund also owns $230 million in Israeli stocks, and has committed $1 billion for private equity investments in the country.

While bond experts agree with DiNapoli that Israeli bonds have been a good investment, the amount of money is tiny compared with the size of the fund.

A 10-year Israel bond currently offers an interest rate of 5.3%, meaning an investment of $300 million would result in $16 million of interest annually. The 10-year Treasury bond, regarded as the safest bond investment available, currently offers virtually a 4.2% interest rate, making the annual difference between the two bonds of a little more than $4 million.

In any event, since Levine has won the Democratic primary for comptroller and is a heavy favorite to win the election in November, the city is likely to be buying Israeli bonds next year.

This press release was produced by The City. The views expressed here are the author’s own.