Alabama PACT: College Saving Fund Tanks

I know and work with people who were trusting this program (4.00 / 2)

This is very bad news.  Not just for the specific families who were relying on it, but for the whole state.  We all benefit from education - I know I certainly get a certain piece of mind from knowing that if I am in a car wreck, the first responders, law enforcement, ER nurses, and doctors are well-trained, well-educated, and able to think and adapt to new situations.

"The War in Iraq is not the disease. The War in Iraq is a symptom. Arrogance is the disease" - Bill Richardson

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by: herding old cats @ Tue Mar 03, 2009 at 20:39:42 PM CST

I actually thought the guarantee was for "X" amount of money, your child got "Y" (4.00 / 2)

amount or semesters in any public university in the state?!  I guess I was wrong.....the prospects of the state not making good on a commitment, although it may have been only a promise between the state and contributing parents - is sickening. The state should honor its commitment, no ifs, ands or buts.

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by: BlueSeeingRed @ Wed Mar 04, 2009 at 00:06:19 AM CST

[ Parent ]

That Helps (4.00 / 1)

I've been thinking about this all nite, trying to figure out how to get at it. Up to this point, I had the understanding of these programs that you just expressed. At the very least, they could have done a better job with their marketing, explained that the money you put in was being invested somewhere, and that there was risk involved.

I don't buy that "No legal or moral obligation" bit. Seems as though there must be a responsibilty on the part of the state to either return the money or provide the service. At least, that's the way many will see it.

Even if there are signed disclaimers, etc.; ethically and politically, this is not much different than defaulting on public debt. If this is a program that a lot of people used, it's going to do some systemic political damage in addition to the damage to peoples' lives that's already been mentioned.

The next question is: How do can we be sure someone didn't simply loot these funds and manufacture the paper trail to prove that the money was lost "fair and square"?

I don't think we can be sure, given all the other ponzi finance that's been going on during the same time frame, and given the state of accounting in this country, and given the fact that our state and federal governments are completely untrustworthy.

The question after that is: "Can the state retirement funds be far behind?"

It's more fun if you comment!

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by: geno @ Wed Mar 04, 2009 at 00:46:08 AM CST

[ Parent ]

It is a matter of honor (4.00 / 1)

But it sounds like there's a real chance the "Y" or number of semesters forthcoming will be greatly reduced.  In New Mexico they just gave families a reduced payout and terminated the program.  Turns out this was nothing more than an investment plan managed by the state, but the risk was born by the families, not the state.

Work harder and work smarter!

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by: mooncat @ Wed Mar 04, 2009 at 00:50:20 AM CST

[ Parent ]

Yeah (4.00 / 1)

I understand, but I don't think that's how a lot of the people paying in are going to understand it. I remember seeing a presentation on a plan like this. It was presented -- at least implied -- as you pay in X per month, and you're guaranteed that Y-percentage of tuition is covered. To make it simple for people to understand, the time was related to how old the child is when you start paying. I'm sure there are disclaimers and fine print, but it was not at all obvious that the principle had to grow in order for the plan to work out. It was sold more as a way to save (payroll deduction recommended) and to hedge against rising tuition rates.

It's more fun if you comment!

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by: geno @ Wed Mar 04, 2009 at 01:26:01 AM CST

[ Parent ]

Thats how I understood it would work, although I never investigated the fine points of the plan.... (4.00 / 3)

This is kinda starting to sound like one big scam by the State of Alabama....

I wonder after this revelation how hard it's going to be for cities in Alabama to sell municipal bonds to fund public projects? 

 

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by: BlueSeeingRed @ Wed Mar 04, 2009 at 21:02:50 PM CST

[ Parent ]

Don't know if "scam" is the word (4.00 / 2)

Because I don't think (???) the state made anything off the PACT fund.  Of course, the fund manager may be scamming everybody.

There's no question this is going to be damaging to the public trust in state government.  Even if they made an attempt to disclose the risks, most people would tune that out because they thought they were investing with the state.  And the manager kept the lion's share of the fund invested in stocks even after most smart folks were predicting a bad bear market.  Mind you that isn't criminal -- I have smart friends and family plenty old enough to know better who did the same damned thing.  After your stocks drop 10 or 15% you start telling yourself that you shouldn't sell when it's so low.  Then it drops another 20% and you're waving good bye to those dreams of retirement.  Anyway, coming on the heels of the JeffCo sewer bond fiasco, I agree the PACT losses will make it harder to drum up money for public bonds in Alabama. 

Work harder and work smarter!

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by: mooncat @ Wed Mar 04, 2009 at 23:34:11 PM CST

[ Parent ]

Good Point Here (4.00 / 1)

I know people who are depending on this in Mississippi, too. For a lot of folks, this is serious money.  And maybe the difference between being an engine mechanic or being an engineer. Or being a secretary who keeps books versus being a CPA. We seem to be in somewhat better shape than AL, but I do not think we can hold out for another full year if we don't see an economic bottom soon.

This is no laughing matter, but I find it darkly ironic that the economic development people can't speak two sentences without mentioning how important workforce training (education) is.

We  talk an awful lot about how important the GI Bill and the good union jobs were to the postwar miracle. We can't forget affordable education. It starts with free public K-12. But higher ed gradually became less exclusive, and a relatively large number of non-veterans were able to get it inexpensively or for free beginning after WWII. It really ramped up in the late 50s and the 60s when foundations started offering scholarships and historically disadvantaged groups finally began to get a little equality.

Aside from the basic safety issue you mention, we can't have prosperity and upward mobility if we're requiring young people to take on years and years of debt just to get an undergraduate degree. Don't know what it looks like over there, but in MS, most of our public universities are getting less than 1/4 of their funding from the state at this point. The rest is tution, donations, and grants.

Conservatives/Republicans know this, of course. And, keep in mind that there's a negative correlation between years of higher education and conservative political views. It's so well-understood that no one even argues about it any more.

This looks like the 401K scam applied to college savings to me.

It's more fun if you comment!

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by: geno @ Wed Mar 04, 2009 at 01:18:40 AM CST

[ Parent ]

This program was our firewall (4.00 / 1)

our "ok if everything ELSE falls apart, we lose our house somehow, get run over by a bus, or whatever... Well, at least the kid has her college tuition paid for."

We used the money our daughter's grandmother left her in 1996 to prepay for an entire contract that, make no mistake is and has always been marketed as:

PREPAID COLLEGE TUITION

It was sold and marketed like an annuity.  You pay X amount now, and in 12 years (or however long), you'll receive Y amount per semester for a certain number of semesters.

If it's not a PREPAID COLLEGE TUITION PLAN, it should have been sold to parents as a college savings plan - which it most assuredly was NOT. 

And now we hear that they were managing this program with blue-sky planning for 8.5% annualized returns forever?  Who the heck came up with that investment strategy.

Oh, and since we've seen this economic storm brewing for at least the last 2 years, it's absolutely unbelievable that nobody moved investments into a safer position - even if it was to park some in cash.

Yep, Mooncat, if this falls apart, I say it sinks Kay Ivey's hopes for governor! 

I'm not short.  I'm fun size!!

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by: countrycat @ Wed Mar 04, 2009 at 06:47:02 AM CST

Too few people realize (0.00 / 0)

that the stock market is the ultimate crap-shoot and that in investing in it, or in anything, they should study and understand the “fine print”. That includes the RSA and other organizations and the investments they make. In good economic times they prosper and look great. These are NOT good economic times and that is reflected in the behavior of the stock market.

Individuals and organizations bet their funds in the markets hoping for a profit on their investment. If they are smart they bet on their investment producing profits in the long term.

Those investors come from all points on the political spectrum, far right, far left, and all points between. The falling market values indicate that investors have no confidence in being able to make a profit on their investments in the foreseeable future. One must ask why they feel that way. One assumption could be that they think the federal government actions and polices are not conducive to a healthy economy in the future.

"My people are destroyed for lack of knowledge...."      Hosea 4:6

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by: driq @ Wed Mar 04, 2009 at 09:33:11 AM CST

No relief in sight from universities (4.00 / 1)

Of course, if UA or Auburn gave big discounts to the PACT students, everyone paying full price would raise hell, understandably.  So, even if they were flush, no help from the universities.

We are in no position to help financially," Auburn President Jay Gogue and UA System Chancellor Malcom Portera said in a joint statement released Tuesday. They said they learned Friday about the troubles of the Alabama Prepaid Affordable College Tuition trust fund, or PACT plan.

 

Work harder and work smarter!

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by: mooncat @ Wed Mar 04, 2009 at 11:01:32 AM CST

hmmmm.... how might it hurt their bottom lines (4.00 / 1)

if these kids have to either drop out of school or can't attend?

And, isn't this troubling?

They said they learned Friday about the troubles of the Alabama Prepaid Affordable College Tuition trust fund, or PACT plan.

And yet, the plan has had financial pressure for some time if it's lost "half its value" in 18 months.

Now, we get an annual statement and letter signed by Kay Ivey at the end of each year.  Nothing in her communication in 2007 or 2008 indicated any problems.

I wouldn't expect that in 2007, but at the end of this year?  Why the rosy, here's your statement, your contract is paid off, etc. etc. with no mention at all of financial concerns?

As I see from the graphs, they sold quite a bit more new contracts during the past year than they have in a long time.  Even more so than long-time contract holders, those people who have bought in during the past year, should get some explanation of why they were signing a contract in good faith, but the state failed to inform them that the fund was ailing.

Are we to believe that the Alabama State Treasurer's office just noticed the problem last week? 

I'm not short.  I'm fun size!!

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by: countrycat @ Wed Mar 04, 2009 at 11:14:05 AM CST

[ Parent ]

Good questions, every one. (4.00 / 1)

And the letter sent out on Friday (pdf available here) is still pretty upbeat.

As you know, the stock market has dropped approximately 50% in the past 14 months.  This event has had a significant negative impact on the invested assets of the PACT trust fund.  PACT is hurting like every other retirement fund and investment account.  The good news is that the Board is working hard and considering options to maintain the viability of PACT. 

For the past 18 years, PACT has timely provided over $400 million in tuition and qualified fee payments to educate 13,400 students.  During this course of time, PACT has enjoyed a very strong relationship with each of Alabama’s public universities and colleges.

We are now meeting with the distinguished leaders of these institutions to form a partnership to allow PACT benefits to be consistently paid.  This process will take several weeks, and we ask your patience while we fully explore this opportunity.

 

Work harder and work smarter!

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by: mooncat @ Wed Mar 04, 2009 at 11:33:17 AM CST

[ Parent ]

PACT - what are our options? (4.00 / 2)

On Tuesday I received the letter from the State Treasurer's Office that the 3 PACTS purchased for my children in the early 1990's were in trouble.  Just last week I'd said to a coworker (who had just told me that she'd lost not only the interest but most of the $12K principle in her two 529 plans)  that I've been too broke to invest in the stock market.  So, while I'd only earned a bit of interest in savings, at least I hadn't lost any principle, either.  My kids' PACTs never crossed my mind. 

     When did PACT turn into a 529 account? I do not believe that is what we bought into back then.  I know the name changed several years ago from "PrePaid Affordable College Trust" to the current name - I can only assume that is when the nature of the trust fund (trust!) changed, too.  Of course, I was not allowed any control as to whether or not I WANTED the account to change (I would never have invested in a highly speculative, UNINSURED account) for something as important as my kids' futures. As of this week they say that PACT has enough money to refund everyone's principles (no interest) but I would like to know for how long?  Is the money STILL invested in the stock market? (OMG, as my daughter says on her phone.)  Just reading the news of the last week (GM, Wells Fargo) I doubt the decline in stocks is over.  If so, how much more is the "trust" going to lose? How long will the board wait before putting on the brakes and salvaging what's left?  Until the principle is gone, too?

      I am scrambling now to learn about other options; I'd not explored Pell Grants and such since I THOUGHT I had tuition and fees covered.  In my search I am finding that some important information is missing.  The PACT website, as well as the papers I received when I paid off the PACTS, provide all kinds of procedural and optimistic  information; NOWHERE does it inform us of our options in the case of PACT not performing as expected.  Kay Ivy has told us not to withdraw our funds because there might be a tax penalty; first I'd heard of on that, and NOWHERE can I find any information onwhat that penalty might be.  (Our PACTS were purchased with after-tax dollars!)  

     Where else can we look for financial aid?  My fear is that our cheese has not only moved, it's been eaten by rats.  Across the nation colleges and universities are bemoaning the fact that this and that endowment, scholarship fund is in trouble since it was "invested".  I've been told that low-interest college loans are not always available (we sure qualify, but that doesn't make the money magically appear).  So even if were qualify for scholarships  (we might - my 17 year-old twins both carry a 3.9 GPA) or for financial assistance (we do - single parent earning less than $55K, with one child half way through college and twins enrolling in 2011), it just might not be there.  Sell my house and move into an apartment for the duration?  Are houses selling these days?  And if it sold, put the money into ... er ... what?  A savings account that's earning 0.5% (bonds not an option as we have a time crunch here). Any advice would appreciated more than you know!

     I know I am just one story among millions in the same situation - 48,000 other Alabama families and unknown millions of retirees and investors who have lost $100's and $1000's recently.  We (US citizens) are in big trouble here, aren't we?

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by: beamingup @ Sat Mar 07, 2009 at 15:49:04 PM CST

[ Parent ]

Welcome, beamingup!! (4.00 / 1)

I love your screen name, and, as you may have read here at LIA, my family is also a PACT victim family.

Like you, in the mid-1990's, we followed my mother-in-law's wish (she had liver cancer) that she wanted to help pay for our daughter's college.  Hey!  Look here!  Alabama PREPAID College Tuition (PACT) program!  Wow... what an insurance policy.  Even if we lose everything else, our daughter can still go to college.

There is nothing in our paperwork either about this being a speculative investment.  It's touted as a "state program" that let parents "prepay" college tuition.  That sounded pretty unambigious to me then - and now.  Not only that, the contract is signed by the Alabama state Treasurer!

And note that the agreement is called a "contract" and not an investment instrument, mutual fund, or anything that mentions risk.

As far as tax penalty... if you bought a "contract" early, there is no tax penalty.  It was only in the late 1990's that the legislature made contributions to a PACT tax free.  So if you bought early, you have no tax penalty if you cash out.  But you also only get the principal - hopefully.

And the actual "529" plan was only added in 2002.  Until then, the PACT was the only option, and it was continually sold as a "prepaid" plan.  The "529" plan is very clear that you're investing money that may be lost.

What ticks me off is that the PACT board and Kay Ivey have been asleep at the switch as the market fell.  How could they have stayed in stocks as the market tanked?  They say that there are "a lot" of kids in college now.  Well, my annual PACT statement has my daughter's estimated college entry date as 2012.  Are they telling us they couldn't do simple math and prepare for a bubble of kids needing tuition payments?

And furthermore, why the heck was Kay Ivey trying to convince parents and grandparents to buy contracts in January and even this month before the news broke?

I'm particularly ticked with her because it looks like she ignored warnings about the program.  See my diary from yesterday for more details:

Kay Ivey on Alabama PACT:  Then and Now http://leftinalabama.com/showDiary.do?diaryId=3531

And again, welcome to Left in Alabama and congratulations on your first comment!

I'm not short.  I'm fun size!!

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by: countrycat @ Sat Mar 07, 2009 at 16:54:08 PM CST

[ Parent ]

PACT- what are our options (4.00 / 3)

Thanks, countrycat.  I guess I was asleep when the terms of the contract were changing, and am glad to know that I'm not totally crazy.  Yes, the word "contract" implies a contractual agreement, not a maybe.  I still wonder why it is so hard to find the "fine print", the information that would allow us to make informed decisions as to whether to pull out our funds or not?  Information such as where the money is right now, what they are doing with it, whether or not the principle is invested or reserved, and what other options we have.  I agree that the board has known all along when PACT kids would be enrolling in college, and they knew there would be a bubble coming up right about now.

My gripe isn't with Ms. Ivey (at this time, anyway - I reserve the right to get incensed at her later should it be revealed later that this situation could have been avoided).  Finger pointing and blaming (a favorite pasttime/tactic of the right, I've noticed) isn't going to get my kids through college.  I do think she was being "less than upfront" with folks by encouraging them to invest in PACT even as the letters were being mailed out to us.  I was at a RSA retirement seminar a few weeks ago and the same thing was going on with the RA-1 folks - encouraging us to contribute and telling us what the profits IN YEARS PAST have been, and noting only that "in 2008 there was a slight loss" (exact figure unavailable!).  These guys are acting like investment brokers and it appears that our best interests are not the same as theirs.  This is our retirement system and our state government doing this stuff!

Since I've now been socked financially, I understand just what millions of other Americans are understanding; we have to use our own resources and judgment, rely on ourselves, and do what we believe is best for our families. We have no faith or confidence in the markets nor in many of our leaders.  And we are disappointed in the GREED that seems to have permeated our society.  What happened to ethics and doing what's best for those they are supposed to be leading and protecting?  That was a contract, too, when they took office. 

We can only hope that Mr. Obama's bold, gutsy plans and programs work.  I don't know whether PACT and 529 plans will be included in the bailout - I do realize that given the big picture, jobs and food on the table and attending to medical concerns trump going to college.  But, bailing out PACT-like programs across the country would probably be quite cost effective since the administration of the programs is already in place and the programs would need only a monetary boost, rather than full funding.

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by: beamingup @ Sat Mar 07, 2009 at 22:49:45 PM CST

[ Parent ]

www.800alapact.com link (4.00 / 3)

I stand corrected when I said yesterday that the information was not on the website. An email from the PACT office today provided me the link needed to find out where the PACT funds are invested, how the program is run, and withdrawal information.  (They are working through the weekend, I see.)   Why all this was not provided to parents (in a booklet maybe) during the annual correspondence from PACT is unknown. 

  "Cancellation and refund information is available on the website
www.800alapact.com, click Current Participants, click Rules.  The form
to submit for cancellation is also on the website, click Program
Documents, click Forms. 

The Disclosure Statement describes the risks of the program.  It is
located under Program Documents."

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by: beamingup @ Sun Mar 08, 2009 at 20:18:28 PM CDT

The information sharing from the PACT board has been poor (4.00 / 2)

 - along with their oversight of the program, from what I can tell.

The early PACT documents called this a "guaranteed" plan and touted it as a way to "prepay" tuition - both words that indicate to the layperson that this is a slam dunk.

It wasn't until 2000 or so that the plan documents changed to clearly indicate in bold type that there were no guarantees or insurance.

The early investors got sold one product, but thought they were buying a completely different animal.  That's not Kay Ivey's fault now, but she certainly needs to explain her role - and that of the board over the past year.

You didn't have to be an investing genius to see that the market was tanking the end of last year.  Why the heck decided that keeping three-quarters of the money in the stock market was a good plan?

Our broker got us out last May.

 

I'm not short.  I'm fun size!!

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by: countrycat @ Sun Mar 08, 2009 at 20:35:21 PM CDT

[ Parent ]

A Couple of Thoughts (4.00 / 1)

Isn't the time frame for the changes in the documents about the same as the time frame that the first few rounds of deregulation really started setting in? I am not up on the actual changes to the law, so this is just specualtion, but worth thinking about.

"Ponzi" is getting thrown around an awful lot these days. The essence of the concept is that early investors are paid returns from the contributions of later stakeholders, rather than from earnings on the overall pool of invested money. That's what separates it from legitimate enterprises that involve pooling the principle and dividing the returns. I find that interesting, in light of what you just said.

Updated my follow-up post with some info I received from a reader who has some professional expertise. From looking at the comments that diary generated, it's not terribly important, but gotta do my best to make sure folks see the correction.

It's more fun if you comment!

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by: geno @ Sun Mar 08, 2009 at 20:47:41 PM CDT

[ Parent ]

Did you see this? (4.00 / 2)

Sorry if someone already caught this. Too much discussion here to remember it all. From one of the pdfs at the link Beamingup provided.

• Public hearing 3/12 to provide opportunites for participants to express concerns to board (watch website for date, time)
• Board meeting scheduled for 3/24

There's an e-mail address there, too.

It's more fun if you comment!

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by: geno @ Sun Mar 08, 2009 at 21:30:39 PM CDT

[ Parent ]

Nice work (4.00 / 2)

This information will be helpful, no doubt. And good point about it not being distributed.

Haven't had a chance to welcome you yet, so Welcome  : )

It's more fun if you comment!

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by: geno @ Sun Mar 08, 2009 at 21:01:09 PM CDT

[ Parent ]

$1,728,000.00 a YEAR "account maintenance fee" for PACTS (4.00 / 3)

Since I've been steered to the documents link on the official PACT website (www.800alapact.com) I've looked over the disclosure statement which lists program fees among other items, I see there has been a $3.00 MONTHLY charge for "account maintenance fee".  I admit upfront that I am not famiiar with investment terminology or strategies - investing is not something I've had the money to do - but I can multiply and divide.  $3.00 a month for EACH PACT, times 48,000 PACTS = $144,000.00 a MONTH to maintain the program. (!)  Now $144,000.00 a month times 12 months = $1,728,000.00 a year for account maintenance. wow. I do not know what kind of costs are incurred in "account maintenance" but that kind of budget does raise some questions.  Was this money taken off the top of investment profits?  How was the $1,728,000.00 spent?  Is this for salaries or computer programs or what?  Can I apply for the job?  That sounded like a LOT of college tuition money to me, so I divided.  $1,728,000.00 divided by $23,000.00 for each student's tuition, comes to 75 college educations a YEAR. Since PACT has "maintained" my kids' money for 16 years, I was hoping some of those 1,202 educations (75 x 16) would be allocated to my kids.  (In previous years each education did not cost $23,000.00 so there really should be more educations out there.)

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by: beamingup @ Sun Mar 08, 2009 at 21:12:01 PM CDT

Nice work (4.00 / 2)

... if you can get it.  And nice work on your part for digging deeper into the PACT costs.  I'm just waiting to hear that the brilliant folks running this program let Bernie Madoff invest money -- or did they just invest in CitiB and AIG?

Work harder and work smarter!

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by: mooncat @ Sun Mar 08, 2009 at 21:56:41 PM CDT

[ Parent ]

$1,720,000 annually in PACT adminstrative costs (4.00 / 3)

Thanks.  I've sent this finding to the Huntsville Times and a letter to the editor in Montgomery.  I'm guessing the mystery meeting place on the 12th will be Montgomery/Birmingham, too far for working folks in north Alabama to attend.  But if I can get the attention of even one vocal PACY parent "down there" maybe they can address it at the meeting.  I hope the press is going to cover this - a lot of voting families in Alabama deserve to be heard and their questions asked.

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by: beamingup @ Sun Mar 08, 2009 at 23:57:29 PM CDT

[ Parent ]

Different Money . . . (4.00 / 2)

From the account maintenance fees?

So, roughly 3.4 million per year just from account maintenance and administrative?

That's a lotta money. 

 

It's more fun if you comment!

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by: geno @ Mon Mar 09, 2009 at 00:14:19 AM CDT

[ Parent ]

PACT administrative and maintenance fees - $ Millions??? (4.00 / 2)

$1,720.00 per YEAR for "account maintenance"; there were other administrative fees attached to PACT, but some of the were one-time/enrollment fees.  Where did you get the $3.4 million figure?  It's a whole lot more 'interesting' than my figure.

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by: beamingup @ Mon Mar 09, 2009 at 09:55:29 AM CDT

[ Parent ]

correction to ty[e (4.00 / 2)

$1,720,000, not $1,720.00  please escuse the typo.

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by: beamingup @ Mon Mar 09, 2009 at 09:59:20 AM CDT

[ Parent ]

Was confused (4.00 / 1)

got it now.

It's more fun if you comment!

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by: geno @ Mon Mar 09, 2009 at 22:30:11 PM CDT

[ Parent ]

account maintenance fees (4.00 / 1)

Hi geno. It may be that the $3.00 a month fee is only for as long as one is making payments on the PACT - a reporter told me that was the way he read it.  It's not clear on the site - the $3.00 is listed along with other fees and just says "monthly".  All the rules and procedures have changed since we bought our 3 PACTS in the early 1990's - I don't remember a monthly fee.  So, all my multiplying and dividing might be way off.  Think I'll stick to questions rather than math from now on....

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by: beamingup @ Mon Mar 09, 2009 at 12:01:13 PM CDT

[ Parent ]

account maintenance fees - still wondering about those (0.00 / 0)

Still NO information on account maintenance fees, (where they come from, how long they are charged, where the money goes) and I'm not sure I'll ever get one since public hearings are just that, they LISTEN, but don't respond to queries.  That, combined with the news yesterday that the fund is minus ANOTHER $22 million due to an error of some type, makes me think an audit would be a good idea.  Maybe some more funding would appear; if they shut down the program and refund the principles, I surely expect them to divide the remaining profits our money earned from the investments among the participants.  I thnk it should be prorated, according to how long they've held our money in 'trust'.  That would be the fairest to those kids in or just about to enter college - they have the least amount of time to start over and/or save enough.  With three in this situation, our only hope is Pell Grant, scholarships, or bailout money replenishing PACT (oh please, oh please).

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by: beamingup @ Thu Mar 12, 2009 at 22:07:44 PM CDT

[ Parent ]

Details, Details (4.00 / 2)

Page 4 of one of those reports.  PDF, so no cut/paste.  Under Liabilities: They  jumped from$81million to $134 million between 2006 and 2007. "The increase in liabilities was primarily due to $71.2 million in securities lending collateral . . . " Also mentions "forward-settling TBA mortaged-backed securities."

Then under Additions. "A securities lending program was initiated in May 2007" and it netted only about $53,000. Administered by BNY Mellon. Total lending activity at year end was about $68 million. !!!

So. Were they trading some mortgage-backed securities and got caught holding the bag when property values plummeted and the flow of trade locked up?

Not saying anyone broke the law, or did anything that wasn't authorized. But someone set the guidelines, selected money managers, and authorized some changes to the way business was being done. Who? Even if it's all technically legitimate, There are other consequences than the legal ones that people could demand.

Saw a detail in one of those other documents that made me think you'd need the comprehensive state budget to actually follow the money.

If someone in the media hasn't figured out who the all the professional money managers are by the 12th, that's a question that I would suggest somene asking, after the more important things about the issues directly related to people who paid in.

Do keep tabs on the big papers. I get the idea that some of them are making an effort, and you know they can't publish without two sources for every fact. Don't assume they aren't trying just because you don't see frequent reporting. This sort of thing is tough, all the way around, so don't assume they're going to be much help, but be alert and keep your fingers crossed.  How many separate agents (private firms) were handling this money, and how much was each pulling out? If they were trading these securities they way it was done elsewhere, there may be commissions per transaction to think about here. And there are counterparties for every trade. Someone made a lot of money here, and they probably did it legally, but it had to be signed-off on by people named in these reports or their subordinates.

If the state refuses to disclose this information without citing a specific statute that  clearly authorizes them to withhold, I'd say a FOI request would be in order.

Will try to look at these documents more when I'm well-rested. Hope everyone has a good week. 

Keep in mind that the media at the state/local level follows what they see as the good story, unless someone calls them off, and that's not as common an occurence as you might think. Similar, but different rules than the Big Media that do nothing but follow the elites.  When you're thinking about how to ask your questions and how to press this toward the general public, remember that Smart questions asked in the right forums can make news. Letters to the editor are a very good idea.

 

It's more fun if you comment!

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by: geno @ Mon Mar 09, 2009 at 01:07:30 AM CDT

beamingup, countrycat, mooncat: (4.00 / 2)

I stayed up way past my bedtime and used my awesome powers for good.

I did it for all the people affected by this, but especially for all the great people at LiA, and most of all for you three.

No idea how much attention it will get. But it is almost Monday morning, and that's a definite plus. Now i can say I've done everything in my power, for the moment.

I'll try to check in here Monday, but won't be around much until Tuesday evening. Keep digging and keep pushing on this until you hit a wall or run out of information or find the answers. I can't do much more than I've done here by myself, but I can probably do quite a bit more if others are feeding me information and helping me think this stuff out. So I will be watching and commenting when I can, and as long as I see people trying to get at this, I will keep doing some work on it, too.

beamingup: Diaries are a good way to put an issue back in play if interest is starting to dwindle, or to highlight some new information that needs attention, because they can be promoted, and that puts them at the top of the page. Don't underestimate the power of a new diary and don't be shy about using them. They're just comments writ large, really. Just a tip, since i don't know what your experience level is, and you seem to be on fire over there.

It's more fun if you comment!

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by: geno @ Mon Mar 09, 2009 at 04:08:32 AM CDT