Is this a pattern?
Wednesday, Jan 20, 2016 - Posted by Rich Miller
* April 21, 2015…
The Chicago Board of Education can’t catch a break as it tries to borrow to pay for upgrades to the third-largest U.S. school system.
First, Moody’s Investors Service and Fitch Ratings cut it to one step above junk last month, delaying a planned $372 million bond sale. Then last week, before a pared-down $296 million version of the deal, set for today, Gov. Bruce Rauner said the system may need bankruptcy protection, an option that’s not legally open to it. […]
Given the system’s more than $9 billion in unfunded pension obligations and growing deficit, Rauner, a first-term Republican, raised the specter of bankruptcy April 14 at an education forum in Chicago. The governor, who supports giving Illinois localities authority to file for Chapter 9 reorganization, repeated his claim that union contracts are putting local governments in financial peril.
* And from a few days ago…
The Chicago Board of Education will sell $875 million of bonds on Jan. 27, according to Bloomberg data from J.P. Morgan, an underwriter on the deal. The deal is made up of $796 million of tax-exempt securities and $79 million of taxable debt, according to bond documents. The proceeds will cover capital projects, convert variable rate debt to fixed, fund swap termination payments and pay debt-service bills, bond documents show.
So, the governor played up the bankruptcy angle the last time CPS went to the financial markets and he’s doing it again just days before CPS sells more bonds.
- wordslinger - Wednesday, Jan 20, 16 @ 11:32 am:
–So, the governor played up the bankruptcy angle the last time CPS went to the financial markets and he’s doing it again just days before CPS sells more bonds.–
Quite the salesmen, is Gov. Death Spiral.
- Sir Reel - Wednesday, Jan 20, 16 @ 11:32 am:
We used to be able to count on politicians being boosters of their city, state or country. While that alone can’t do much, at least it made us feel good.
Today, we can’t even count on that. Sad state of affairs.
- Anonymous - Wednesday, Jan 20, 16 @ 11:33 am:
Twice could be a coincidence, or it could be the beginnings of a pattern. We need more evidence to be certain either way.
- RNUG - Wednesday, Jan 20, 16 @ 11:35 am:
Which of his buddies are making money on the deals?
- Sense of a Goose - Wednesday, Jan 20, 16 @ 11:36 am:
So he makes these pronouncements in timing with bond sales that he approves, costing the government millions? I thought he was trying to cut government spending. His buddies are making out like bandits. Guessing the fiddle lessons are going to pay off.
- Anon221 - Wednesday, Jan 20, 16 @ 11:37 am:
We need to know who is buying these bonds for the long term. If this is a pattern, then someone is piecing together a very expensive “quilt”.
- Blue Dog - Wednesday, Jan 20, 16 @ 11:47 am:
I think that this has developed into enough of a pattern that someone needs to look at who is making money on these sales and if they have any connection to the Governor.
Hopefully, no connections will be found. The question still needs to be raised. We have a ultra wealthy businessman with many connections to the fiscal market making statements that drive up the price and profits of products that market provides.
In the name of transparency, this should be looked at.
- cdog - Wednesday, Jan 20, 16 @ 11:50 am:
Yes. If it quacks like a duck, walks like duck…
Keep digging. This is really good reporting.
Who benefits? Hedge funds that cashed out of equity positions recently waiting to get some of that first paid 4% interest.
- northsider - Wednesday, Jan 20, 16 @ 11:51 am:
Purposely interfering with CPS financial dealings on the free market? Attempting to seize a school system and force it into bankruptcy. The chief executive of this state is effectively declaring war on the children and parents of the largest city in this state.
I wonder how hard it would be to secede?
- Are Ya Kiddin' Me? - Wednesday, Jan 20, 16 @ 11:56 am:
If this is a pattern and it can be proved that (1) his buddies are making money off of his “manipulation” of the credit markets and (2)he (Rauner) is using his manipulation of the credit markets for his political gain, then the Feds will be all over this.
In reality this is the same white collar crimes that others have gone to jail for.
When a person of power or knowledge over a market (stock and/or bond) manipulates it for personal gain, it’s called jawboning and its illegal.
- Former Hoosier - Wednesday, Jan 20, 16 @ 11:56 am:
Follow the money…
- Ghost - Wednesday, Jan 20, 16 @ 11:59 am:
on a regulatory note. the Gov has interests in the financial markets… and using his office to manipulate the markets by talking of bankruptcy around a security exchange is a major nono. especially since bankruptcy is not lawful, so the gov is not speaking about an existing reality. He may get to see the feds up close…. 3 govs in a row indicted? this is Illinois….
- sal-says - Wednesday, Jan 20, 16 @ 12:01 pm:
How can ANYONE view this as ethical? May work swell in vulture capitalism, but how can this guy continue to sabotage IL? And for how much longer? How is this not abuse of power? How is this even legal as IL’s chief executive officer?
- Norseman - Wednesday, Jan 20, 16 @ 12:13 pm:
Who needs Ty when you have the gov trashing the state’s financial interests.
- TwoFeetThick - Wednesday, Jan 20, 16 @ 1:37 pm:
This is the primary purpose of this administration, IMO. Running the state into the ground leads to higher bond prices, which mean Rauner’s buddies get a guaranteed return with no risk. Follow the money indeed. This is especially a great deal for them in light of what’s happening in the stock market.
- Square Pegs - Wednesday, Jan 20, 16 @ 2:11 pm:
Is he trying to destroy the state?
What is his deal????
why did he run for governor if he hates Illinois?
He is not doing anything to make this state better. He is scaring off GE and other investors. The city is 2/3 of the economy (something like that).
I’m so frustrated with this guy!!
- cdog - Wednesday, Jan 20, 16 @ 2:17 pm:
I have an unfolding narrative in my over-active mind.
Is this the beginnings, or a glimpse of a secret entrenched “industrial debt complex?”
Of course it starts with buying the office through pummeling any reasonable opponent with messaging at a frequency and volume that no normal candidate could afford.
Ah, gotta love Citizens United.
This could make “vulture capitalism” look reasonable.
- Chicago Cynic - Wednesday, Jan 20, 16 @ 2:35 pm:
Too bad we can’t sue Rauner for breaching his fiduciary duties to the people of Chicago. We can’t, can we?
- Mama - Wednesday, Jan 20, 16 @ 5:14 pm:
++- TwoFeetThick - Wednesday, Jan 20, 16 @ 1:37 pm:
This is the primary purpose of this administration, IMO. Running the state into the ground leads to higher bond prices, which mean Rauner’s buddies get a guaranteed return with no risk. Follow the money indeed. This is especially a great deal for them in light of what’s happening in the stock market.++
…So Rauner and buddies are making money by tanking IL - - interesting and sad. Is this legal?