Nearly a hundred years ago, Andrew Carnegie contributed $10 million to start a fool-proof system of free pensions for college professors. The steel-magnate-turned-philanthropist’s reasoning was that faculty members would be less likely to preach revolution if they were confident they would be comfortable in their old age.

Since then, Carnegie’s system has grown into Teachers Insurance and Annuity Association and College Retirement Equities Fund, one of the largest and most respected financial service providers in the world, with $290 billion in assets under management.

TIAA-CREF opened its various investment vehicles to the general public in 1987, after some adverse tax law changes. Today the firm competes for customers with Fidelity, Vanguard and all the rest.

Its handsome advertisements feature college professors, artists and Nobel laureates pursuing the mysteries of the universe. “Managing money for people with other things to think about,” the tag line goes.

The organization is widely recognized as a voice for shareholder rights and improved corporate governance as well.

And, reassuringly, TIAA-CREF president Herbert M. Allison Jr. last week was letting it be known that he had taken himself out of the running to head up the New York Stock Exchange.

“A number of current board members and high-profile executives, including Silicon Valley attorney Larry Sonsini, TIAA-CREF chairman Herbert Allison, and former New York Federal Reserve President William McDonough, have rebuffed calls that they come to the rescue of the world’s best known stock exchange,” wrote Matthew Goldstein in The Street.com.

Rebuffed? Perhaps. In Allison’s case, it may be for the same reason that he’s not campaigning for Queen of the May. There is slim chance that he’d be chosen.

Allison, 60, graduated from Yale, served in the US Navy in Vietnam and earned a Stanford MBA before joining Merrill Lynch & Co. in 1971. He rose in due course to become president of the nation’s largest brokerage firm.

Then in 1997, Merrill’s Houston-based energy analyst John Olson downgraded his estimate of Enron Corp. to “neutral.” Enron responded by cutting Merrill out of a $750 million stock offering. Whereupon a couple of high-ranking Merrill Lynch executives pleaded with Allison to phone Enron’s Kenneth Lay and Jeff Skilling to persuade them to reverse themselves.

Allison made the call. Merrill Lynch quickly was restored as co-manager on the deal — immediately gaining underwriting business worth $40-$50 million. Energy analyst Olson “resigned” from Merrill Lynch the next week and was replaced by a specialist who a few months later renewed Enron’s “accumulate” recommendation.

Allison left Merrill in 1999. Enron still was flying high. Its decline and fall were two years away; the recognition of Merrill Lynch’s key role as marketer of Andy Fastow’s notorious LJM2 partnerhip, with its inflated management fees, yet farther.

Allison served as finance chairman for the presidential campaign of John McCain. He was a member of Yale University’s famous investment committee.

And in the summer of 2000, he agreed to become president and CEO of a distance-learning venture undertaken by Oxford, Princeton, Stanford and Yale Universities known as AllLearn.org.

But that alliance took an ill turn. Princeton University pulled out in November 2001, saying it was more interested than the others in a non-proprietary approach. The other schools persevered, and last autumn the Yale Herald crowed, “In an arena where other prestigious universities have failed, Yale’s on-line learning venture in collaboration with Oxford and Stanford, is one of the few ‘dot.com’ university projects that has grown and flourished.”

There is, however, some evidence of bad feelings left behind, including post on the Yale Insider Web-log noting Yale president Richard C. Levin’s continuing chairmanship of the consortium.

And in any event Allison quit AllLearn after just two years to take the job as president of TIAA-CREF. He replaced the highly-respected John Biggs, who stepped down after thirteen years.

Meanwhile, in the summer of 2002, Allison was appointed chairman of the board of the newly-created Vietnam Education Foundation by President George Bush — just two weeks before Senate hearings on Capitol Hill called attention to Allison’s role in regaining Enron’s business for Merrill in 1998. The Congressionally-funded Vietnam Foundation provides for Fulbright-Scholar-like exchanges between the United States and Vietnam.

Allison took over as CEO of TIAA-CREF last November. Among his first outside undertakings was to join the board of the New York Stock Exchange, as a member of the compensation committee, no less. Through a spokesman Friday, he said that it had been the board itself, not NYSE chief executive Dick Grasso, who had invited him to join.

Board membership had been attenuated by the resignations of Martha Stewart and Vivendi’s Jean-Marie Messier, and the vocal opposition of New York Attorney General Elliot Spitzer’s to the nomination of Citigroup’s Sandy Weill.

Last week Allison posted on the TIAA-CREF Website a stiff “Message to Participants” in response to a variety of questions that had been asked. He noted that he had become a board member only in June and thus had played no part in negotiating the pay package that led to Grasso’s resignation. He supported the board’s decision to fully disclose the extent of the compensation, he wrote.

“Thanks in part to those disclosures, the Exchange has been opened to unprecedented public scrutiny… Our company remains as committed as ever to promoting good public governance.”

If Allison has similarly discussed with participants his role at Merrill Lynch in the Enron affair, I haven’t been able to find it.

Meanwhile, TIAA-CREF last week announced a round of layoffs — the first in its hundred year history.

They’re running your money, so you don’t have to think about it? Think again! Herb Allison is an extremely capable executive, but a poster-boy for corporate governance he is not. Don’t TIAA-CREF overseers owe participants an account of the thinking behind their choice?