In December 2008, Harvard issued $2.5 billion of bonds, refinancing $1 billion of existing debt and taking on an additional $1.5 billion.
The timing was terrible: Harvard was borrowing money at a time when the spread between yields on corporate bonds and U.S. Treasury securities was the highest in at least 18 years, according to data from Barclays Plc. A few weeks after Harvard exited the interest-rate swaps, the contracts began to recover.
In January 2010, the school borrowed $400 million more, increasing its debt to $6.5 billion, up 71 percent from 2007, Moody's Investors Service said in a Jan. 8 report.
Summers Flap
Summers resigned in 2006 after provoking a firestorm of protest by suggesting in a speech that female students had less aptitude for math and sciences than males. He also publicly clashed with African-American studies professor Cornel West over a hip-hop record West participated in. West now teaches at Princeton. Summers declined to be interviewed for this story.
Today, Mendillo takes Boston's T mass transit system's Red Line to Cambridge to meet with Summers's successor, Drew Faust, once a month.
Faust, a history professor and former dean of Harvard's Radcliffe Institute, which emphasizes women's studies, is the first woman to lead Harvard and the first president without a degree from the school since Charles Chauncy in 1654. (Faust received a bachelor's degree in history from Bryn Mawr College in suburban Philadelphia and her master's and doctorate from the University of Pennsylvania.)
Their talks center more on management than on what types of assets to invest in.
'Reassured Alumni'
"Her role is not to pick stocks so much as it is to run the whole organization," Faust, 63, says.
"One of the impressive aspects of Jane's performance is the way she dealt with alums," she adds. "She's been pretty transparent and has explained things clearly and has really reassured our alumni community."