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User Info	Florida Gov't Won't Accept Loss!!!; entered at 2007-12-01 10:12:06
Paulmc0307 Posts: 446 Registered: 2007-09-16 los angeles	This is exactly what you would expect from inexperienced government officials. In other word, they too have not learned to "mark it to market." As the reality that the loss is "real" (whether they accept it or not), starts to sink in, the psychological damage to others in similar situation will be crushing. Eventually, this will make Northern Rock pale in comparison, as the size of deposits are an order of magnitude higher. The question, however, is will this matter in the near term. Florida Governments Reject Idea of Accepting Losses on Pool By David Evans Dec. 1 (Bloomberg) -- A newly formed advisory panel composed of Florida school and local government officials with money frozen in a state-run investment pool said they won't accept a return of less than 100 percent of their investment. Members of the new panel, on a conference call late yesterday with officials from the agency that runs the fund, rejected a proposal to survey pool participants to determine whether they would accept as little as 90 cents on the dollar of their deposits in order to access their money in December. ``The very fact that you're out here talking to us about taking less than 100 percent is in my mind unacceptable,'' said MaryEllen Elia, superintendent of Hillsborough County Public Schools, which has $573 million tied up in the pool, more than any other school district. ``You need to figure out how to make the taxpayers in Florida whole. It isn't going to be fixed by asking us to take less than what we put in there.'' School districts, towns and cities across Florida were cut off from their money after the State Board of Administration, manager of the Local Government Investment Pool, halted withdrawals Nov. 29 to stem a run on the fund. Participants pulled out almost half the pool's $27 billion in assets after learning it held $1.5 billion of downgraded and defaulted debt tainted by the collapse of the subprime mortgage market. Thousands of schools, towns and fire departments across the U.S. keep their cash in state- and county-run public accounts. Modeled after private money-market funds, the funds are supposed to invest in safe, liquid, short-term debt. Bursting Bubble The downgrades in Florida show the far-reaching effects of the bursting of the housing bubble as complex investment vehicles once marketed as high-yielding, safe havens are now backed by collateral investors don't want. Late yesterday, the board disclosed that an additional $1 billion was withdrawn from the pool just before the freeze, reducing its size to $14 billion, a 48 percent decline for the month. On Nov. 29, state officials said the pool held $15 billion. Representatives of pool participants from schools, cities and counties said they would press Governor Charlie Crist and the Legislature next week for a cash infusion. Kevin SigRist, deputy executive director of the State Board of Administration, said the board can't promise to make them whole. ``We don't ever want to be in a situation here at the SBA where we are somehow issuing guarantees or suggestions that everyone will get dollar for dollar,'' said SigRist, who substituted on the call for executive director Coleman Stipanovich. Meeting Next Week The Florida board's three trustees -- Crist, state Chief Financial Officer Alex Sink and Attorney General Bill McCollum - - will meet again on Dec. 4 to consider the crisis. No call participants from the State Board of Administration could say if the board had selected an independent financial adviser for the pool, as the trustees ordered Nov. 29. The sometimes raucous telephone conference call, which lasted more than two hours into the early evening, ended with a decision to poll pool investors on how much cash they absolutely need to withdraw from the pool over the next 90 days, as well as how much they plan to deposit. By freezing the Florida fund, officials left governments without ready access to cash they are accustomed to drawing upon for routine expenditures. The pool was the largest of its kind in the U.S. at $27 billion before the unprecedented withdrawals. The Jefferson County school district was forced to take out a short-term loan to cover payroll for the 220 teachers and other employees in the system after $2.7 million it held in the pool was frozen. At least five other districts also obtained last-minute loans, said Wayne Blanton, executive director of the Florida School Boards Association. ``The unthinkable and the unimaginable have just happened here in Florida,'' said Hal Wilson, chief financial officer of the Jefferson County school district. To contact the reporter on this story: David Evans in Los Angeles at davidevans@bloomberg.net . Last Updated: December 1, 2007 00:02 EST