Local governments continue investment withdrawals; managers pos...
There are 3 comments on the South Florida Sun-Sentinel story from Dec 7, 2007, titled Local governments continue investment withdrawals; managers pos.... In it, South Florida Sun-Sentinel reports that:Local governments withdrew about $560 million of their money from Florida's state-run investment pool Friday, but the beleaguered fund's managers were pleased that figure was about half the amount from a day ...
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#1 Dec 7, 2007
As a banker friend of mine said yesterday, It would help if someone would tell us where the fund went wrong in the first place, who was in charge and what conflicts of interest were involved, and who is backing up the fund if it should fail and some counties still had money in it. One guesses that this is to much to ask.
#2 Dec 7, 2007
Unfortunately they probably have no answers to those questions. The pool, like many others, probably just saw a AAA rated investment with a higher yield and bought it in total relaince on the credit rating. This seems to have happened with many other money market funds recently and it wouldn't surprise me if there are more headlines like this in the near future.
When I opened a money market fund two years ago I chose a treasury money market fund with a lower yield because it was comprised solely of treasuries guaranteed by the US government. Everyone thought I was nuts but no one seems to realize that a money market fund can break the buck and there is no guarantee or insurance many times for it retaining a dollar equivalency per share. I'm not sure how the head of the pool did not realize this but maybe they were trying to squeeze out some extra gains in spite of the pledge to be safe.
#3 Dec 7, 2007
The place where the fund went wrong was seven years ago when Jeb Bush got his campaign manager's son the job as head of the State Board of ADministration.
It was criminal to let local government funds held by the SBA get this far into the subprime mess.
I truly believe this crap is part of the tainted legacy of the Jeb Bush administration. I also don't see how the state can get by without making up losses for local government funds from the taxpayers pocket.
The SBA had a fiducuary obligation to safeguard local funds first, before taking foolish risks to make money.
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