The St. Petersburg Times reports on the incompetence of Florida politicians that caused the state to lose hundreds of millions in bad investments.
Democrat Gubernatorial Candidate Alex Sink, who currently is the state Chief Financial Officers, was the key person responsible for the decisions made.
Three years ago, the state of Florida made bad investments that lost hundreds of millions in value. State leaders blamed the sharks of Wall Street, who they said duped Florida money managers into buying way-too-risky securities.
Chief Financial Officer Alex Sink pushed the state to sue big banks, which she said dumped tainted investments on Florida.
Gov. Charlie Crist demanded a no-holds-barred investigation and named four Wall Street firms that he suspected took advantage of the state.
Attorney General Bill McCollum wondered if there had been fraud and promised help with an investigation.
But no bank was prosecuted, no lawsuit was filed and there was never a full accounting of a financial debacle that could cost Florida governments and taxpayers hundreds of millions of dollars.
Now the St. Petersburg Times has obtained e-mails and internal memos that document a story at odds with the one told by Crist, Sink and McCollum, the elected officials responsible for oversight of the state’s money managers.
The securities Wall Street “dumped” on Florida? The records show the state was anything but an innocent dupe; it was an eager partner.
Going back at least seven years, state money managers had been trying to find a way around rules that restricted them from buying certain risky securities. Time and again they asked, time and again lawyers told them no.
But so eager were Florida’s money managers for higher yields, they bought them anyway. In two months at the brink of the housing market meltdown in 2007, the state invested at least $9.5 billion in securities it was not authorized to buy, a review of confidential memos shows.
”Florida can’t say it got snookered,” said Peter Henning, a Wayne State University law professor and securities law expert, when told what the documents said.
“They were chomping at the bit to buy risky securities. … These weren’t lambs being led to the slaughter. They weren’t fooled. … They seemed to go along quite happily.”
Ed Morrisey comments on the wisdom of Florida voters in rejecting Governor Charlie Crist, who faces near certain defeat running as an independent for Senate against Marco Rubio, and Attorney General Bill McColumn, who lost the Republican nomination to Tea Party candidate Rick Scott. Voters should now reject Alex Sink in favor of Rick Scott for governor.
This proves the wisdom of the anti-establishment impulse among Florida Republicans this year. Both Charlie Crist and Bill McCollum were the anointed candidates for the Senate and Governor, respectively. Crist has already been exposed as using party funds for his family vacation at Disneyworld, and now Crist appears to have misled Floridians on the nature of the state’s activities in the market. McCollum would have had a difficult time explaining himself in this instance as well after having encouraged a criminal investigation, although he at least didn’t appear to politicize it to the extent that Crist did, who publicly accused four Wall Street firms of intentionally defrauding the state.
The main culpability belongs to Sink, however. She had the fiduciary duty to perform due diligence on the agencies handling these investments, as well as enforce the law in handling Florida’s treasury. Instead, Sink and her team appear to have tried to find ways around the law, and in the end broke them to jump on a bandwagon as the wheels came off. Later, when the collapse came, Sink looked for ways to blame others for her lack of oversight and discipline, as did Crist and McCollum, who were also trustees to the fund.
Sink has served as Florida’s CFO since January 2007. The illegal purchases that lost hundreds of millions of dollars in bad investments happened entirely on her watch. If Sink couldn’t handle her primary duty as CFO nor own up to her failings in that position, Florida should hardly trust her with broader responsibilities. They should be chasing her out of the position she holds now.
On November 2, 2010, elect Rick Scott for Governor so that we can clean up the mess left by Florida’s establishment politicians. Read about his 7-7-7 blueprint for Florida’s future.