* Democratic US Sen. candidate Alexi Giannoulias has two new TV ads up and running. I’m told they’re not being run in a way that dilutes the points. The first one we’ll look at is entitled “Heroes” and features a young African-American woman talking up the Bright Start college savings program. There are some obvious political calculations there, since the person polling second in this race is a black female. Watch it…
The second ad is called “Values” and talks about how he “recovered millions” when “Wall Street made improper investments.” Have a look…
I’ll have buy info for subscribers tomorrow.
Democratic rival David Hoffman may have gotten a sneak peak at the new Giannoulias ads, which were officially unveiled this afternoon, because he sent out a press release this morning. It’s long, but worth a look…
Giannoulias’ TV Ad Makes Questionable Claims About Bright Start
Illinois State Treasurer, Alexi Giannoulias, has a long-standing habit of claiming credit for the good things that happen during his tenure, but when it comes to taking responsibility for the mistakes and failures on his watch, he has been skillful at distancing himself. There is no bigger failure during his time as Treasurer than his mismanagement of Bright Start, the college savings program for families who aspire to send their children to college. And true to his nature, Mr. Giannoulias accepts no responsibility for his mismanagement and oversight failure of the $150 million that Illinois families lost in the savings fund.
Quite the contrary, Mr. Giannoulias has perpetrated a number of myths about his management of Bright Start that raise serious questions about his performance in office. This document lays out the many myths that Mr. Giannoulias has put forward over the last year and provides facts that will give you some perspective on the degree to which he has sought to duck responsibility for his mismanagement of Bright Start, and how he purposely misled the public about the catastrophic loss incurred by Illinois families who invested in the program.
As you begin to cover the last four weeks of the Senate Democratic primary, we hope you will ask the many questions about Bright Start that Mr. Giannoulias for more than a year has refused to answer. Voters deserve to know the true records of the candidates. Mr. Giannoulias has covered up his record with false claims and myths. You now have an opportunity to expose them.
Myth vs. Reality
True Loss to Bright Start Victims
Myth. From the very beginning of 2009, Mr. Giannoulias led the public to believe that Bright Start victims lost $85 million in the college savings fund.
Reality. On December 22nd when Mr. Giannoulias announced the settlement with Oppenheimer, he revealed for the first time that the true extent of the loss was $150 million.
Myth. On June 8, 2009, Mr. Giannoulias announced that he had a “tentative settlement” that would return 90 percent of the lost money to Bright Start victims.
Reality. On December 22, 2009, Mr. Giannoulias announced that the settlement would only return 51 percent of the lost money to Bright Start victims.
Giannoulias Markets the Core Bond Fund as Safe
Myth. In the Bright Start promotional material published by the Treasurer’s office, the Core Bond Fund was characterized as a conservative savings fund.
Reality. Mr. Giannoulias knows that the fund is investing in mortgage backed securities and corporate junk bonds. It said so in the Treasurer’s own promotional materials. Oppenheimer also told the Treasurer’s office on April 22, 2008 that, since fourth-quarter of 2007, the Core Bond Fund was investing in risky mortgage backed securities.
Myth. Mr. Giannoulias, a self-proclaimed experienced banker, should have known that risky mortgage backed securities were an inappropriate investment for families seeking to save money to send their children to college.
Reality. Mr. Giannoulias ignored all the warning signals, including the collapse of Bear Stearns under the weight of toxic mortgage backed securities and Morningstar financial analyst reports, and continued to allow families to invest their money in the Core Bond Fund from April of 2008 up until December of 2008, by which time they had lost almost 40 percent of their investment.
Myth. Mr. Giannoulias, knowing that the Core Bond Fund is heavily invested in mortgage backed securities and corporate junk bonds, claims he has no knowledge how the Core Bond Fund lost almost 40 percent of its value, and places all the blame on Oppenheimer.
Reality. Mr. Giannoulias emailed Oppenheimer on May 6, 2008, saying he wanted to discuss Core Plus’ underperformance. He demanded weekly status reports and monthly performance meetings. The fund was in a free fall, losing 20 percent by October 24, 2008 and 38 percent by December 4, 2008. From May 6, 2008-December 4, 2008, knowing full well that the Core Bond Fund was declining in value at a rapid rate, Mr. Giannoulias continued to allow families to invest in the fund.
How is Bright Start Rated?
Myth. Mr. Giannoulias routinely brags that Bright Start is rated as one of the top five college savings plans in the nation.
Reality. Morningstar Financial dropped Bright Start off its top programs list on May 14, 2009, citing losses in the Core Bond Fund due to investments in mortgage backed securities and credit default swaps.
Giannoulias Record on Transparency
Myth. Mr. Giannoulias claims “sunshine is the greatest disinfectant.” He claims that he imposed very tough ethics rules on himself when he became Treasurer.
Reality. Mr. Giannoulias stonewalled the Hoffman Senate campaign’s FOIA requests for documents on Bright Start for three months, which allowed him to continue to hide the true cost of the Bright Start loss and evade accountability.
Giannoulias’ View of Oppenheimer
Myth. On March 12, 2007, Mr. Giannoulias announces Oppenheimer as the New Manager of Bright Start. He promises they will have a good track record in investing Bright Start money.
Reality. On January 29, 2009, Mr. Giannoulias accuses Oppenheimer of “gross mismanagement.” He asks Attorney General, Lisa Madigan, to pursue a legal settlement to recover the lost funds. But after taking no responsibility for the mismanagement of Bright Start, and after blaming Oppenheimer exclusively for the loss, he keeps them as the investment advisor for the fund, where they continue in that role today.
Giannoulias’ View of the Bright Start Settlement
Myth. Giannoulias’ press spokesman put forth this reaction to the settlement: “This puts them back in the ballgame and will allow Bright Start families to move forward with their savings goals.”
Reality. Far from being back in the ballgame, Bright Start families have had their college savings plans decimated by the lack of oversight that Mr. Giannoulias failed to deliver in policing the hard earned money put away by these families. He is the Treasurer of the State of Illinois, one of the top financial officers of the state, yet he takes no responsibility for the devastating loss these families incurred. Mr. Giannoulias should ask any family who only recovered 51 percent of their investment if they “are back in the ballgame.”
Hoffman’s campaign, by the way, has a new Internet video trumpeting his endorsement by Paul Vallas. Take a peek…
- cassandra - Monday, Jan 4, 10 @ 4:11 pm:
I like Hoffman and plan to vote for him but I can’t help but think this is overkill. So many people lost so much money in the Great Recession, and there are so many villains that Alexi seems more like a victim than a big offender.
- Yellow Dog Democrat - Monday, Jan 4, 10 @ 4:19 pm:
Alexi is making another major media buy, Hoffman is scrambling for earned media and posting internet videos.
And Hoffman’s news release isn’t even a good one.
One candidate “questions” the claims of another candidate for a statewide office?
Stop the presses!!!
BTW, Hoffman claims in his release that Illinois families lost $150 million in Bright Start in paragraph one, but in paragraph 11 we learn that $77 million was recovered, meaning they only lost $73 million. Sounds like Hoffman is the one making the questionable claims…and then calling himself into question!
- OneMan - Monday, Jan 4, 10 @ 4:23 pm:
Don’t worry our candidate will have enough money to point all of this out about Alexi when the time comes.
- BottomLine - Monday, Jan 4, 10 @ 4:24 pm:
Total out all these words, and you get down to the idea that 5 out of 50 states were invested in the Oppenheimer thingy and 45 were not.
It would have been better if Illinois were in the 45, not the 5. And the Treasurer is responsible for that. And we all decide if he should be promoted to a much more important job on Feb. 2.
Go Hoffman.
- Chicago Cynic - Monday, Jan 4, 10 @ 4:24 pm:
Wow, you lose 51% of working people’s college savings and have the gall to claim it as a success. Amazing.
Cassandra, the facts are real important here. In April 2008, Alexi knew (by his own admission) that Oppenheimer was investing up to 50% of the supposedly safe Core Plus Bond Fund in mortgage backed securities and junk bonds and that those investments were risky. Instead of telling people while their money disappeared, he let it ride. And six months ago he freezes the press by low-balling the losses at $85 million and claiming he was getting 90% back when he knew the losses were $150 million and he’d be getting 51% back.
Alexi’s not a victim. Alexi’s one of the perpetrators. And he’s personally and directly responsible for people losing almost 50% of their money.
- Anon - Monday, Jan 4, 10 @ 4:47 pm:
Math for dummies: If I have 5 pieces of cake, you take 4 pieces (2 of those after I knew you were taking them), and give me back one, what is the result? Real world: I’ve lost 3 pieces of cake. Politician’s fantasyland: I’ve save one piece and should be greatful.
- VanillaMan - Monday, Jan 4, 10 @ 4:53 pm:
One doesn’t have to believe that Giannoulais is corrupt to recognize that his move regarding Bright Star, wasn’t either bright, or a start. So, personal attacks miss the point. As Treasurer, Mr. Giannoulais is responsible. Period. There is no reason to defend any public servant who has this kind of mark on his tenure. We lost. It is only right and proper to hold him responsible for that loss. As a matter of fact, it is our duty to hold public officials responsible when events similar to this occur. Mr. Giannoulais is asking for a promotion from us. Based on his tenure in his first public office, we should have reservations regarding that promotion. It is only right.
I still sense that any incumbant, with the exception of Ms. Madigan and Mr. White, are electoral poison that should not be nominated. The best thing for the party to do is to clean it’s slate, because it still seems likely that a plurality of Illinoisans want a public cleaning. We need to either do it now in the Primary, or allow them to do it later this November. If we wait, we will lose.
- JonShibleyFan - Monday, Jan 4, 10 @ 5:07 pm:
So Money Magazine and Consumer Reports both rate Bright Start among the best college savings programs in the nation.
I guess it is bright, and a start.
- well - Monday, Jan 4, 10 @ 5:17 pm:
If Giannoulias honestly believes that he did a good job with Bright Start after losing more than $70 million in a “safe” fund then he was clearly awarded far too many participation trophies as a child.
Because losing $70 million in the safe fund (when comparable funds posted 5% GAINS) is a failure under almost anyone’s definition.
- Arthur Andersen - Monday, Jan 4, 10 @ 5:19 pm:
Sometimes the truth is longer than a soundbite.
Having said that, what good is a banker who can’t do math? That’s what Illinois has with Alexi and the US Senate is the last place where a banker who can’t crunch numbers belongs.
Alexi and Co. never got the numbers right (or the timeline, for you detail folks) on the BS loss until the bitter end. Hoffman is spot on here. Verbose, perhaps, but spot on.
Alexi raised 1 in 5 of his (07-08) State campaign dollars from money managers, brokers, and hedge fund owners, which he completely denies. Read the D-2’s and see who’s lying.
Alexi & Co. tried to push Filan’s discredited pension investment consolidation plan as a “reform” with no independent study or analysis of the costs/benefits. When concerns were raised about the validity of his calculations, he hurled personal insults at the opponents instead of acknowledging the weaknesses. A third party study ordered by COGFA proved savings would be non-existent under real world conditions.
His arrogance is exceeded only by his ignorance.
- Reformer - Monday, Jan 4, 10 @ 5:22 pm:
When Vallas last appeared a couple of months ago, it was as the potential REPUBLICAN candidate for Cook County Board President. Since when do Democrats take advice about whom to nominate from a Democrat-turned-Republican?
- Arthur Andersen - Monday, Jan 4, 10 @ 5:25 pm:
When did those magazines issue the glowing recommendations?
Don’t know about Money, but CR’s went to press long before the full Oppenheimer mess was revealed. Besides, although I might check them out before buying a vacuum cleaner or a frying pan, Consumer Reports wouldn’t be in my Top 10 list of informed financial data sources.
- CircularFiringSquad - Monday, Jan 4, 10 @ 5:31 pm:
The good news is no one is mentioning how much TugBoatAnnie lost before the new Administration took over and lost more.
- Responsa - Monday, Jan 4, 10 @ 6:00 pm:
I cannot help but think that a political consulting firm told Alexi to get out in front of the Bright Start issue as a way to pretend it is not an embarrassment to him and his current office. I also cannot help but think that the consulting firm gave him very bad advice which will prove quite dangerous to him in the general election if not before.
That said, the “Heroes” ad is not bad and leaves a rather warm feeling about the AA student who suffered such a grievous loss. The “Values” one, however, is HORRIBLE. I mean, he smirks and asks “what good is running for office if you can’t help people live better lives”? I laughed out loud and thought to myself that Blago, and in fact quite a few politicians seem to have other ideas about why one might run for office apart from noble public service. (Unless, of course the people you are talking about “helping” to live better lives are your campaign contributors, or when you have something “golden” available for sale.) Alexi and staff may want to re-think this ad.
- Anon - Monday, Jan 4, 10 @ 6:23 pm:
Vallas wants both his REPUBLICAN cakes. He told the Reader:
” . . . Vallas tends to lean Republican on economic issues and foreign policy, and earlier this year thought about running as the GOP’s candidate for Cook County board president.
In fact, Vallas admitted that he’s a fan of the likely Republican Senate nominee.
“I think Mark Kirk is an excellent candidate,” he said. “I think the Democrats will try to paint him as a right-winger and he’s got to be careful not to do that. But I think he’s an excellent candidate.”"
- yaya... - Monday, Jan 4, 10 @ 6:45 pm:
Ever since Hoffman first floated his name Miller has been trying to make this a race against Alexi. Problem is, Hoffamn never showed up. Alexi drops two new ads and Hoffman drops a press release. Wow. Hoffman is really on the move. It’s time for Illinois’ political elites (Madigan’s paid minnions) to get off Alexi. Lisa didn’t have the guts to putt the trigger while Alexi did. Get over it. Maybe the delicate Republican will have a better chance against Alexi rather than Hoffman!
- Rich Miller - Monday, Jan 4, 10 @ 6:55 pm:
===Ever since Hoffman first floated his name Miller has been trying to make this a race against Alexi.===
Moron, perhaps you didn’t notice that Hoffman is running for US Senate. That generates coverage. Sheesh. Go soak your head in ice.
- south of 74 - Monday, Jan 4, 10 @ 7:24 pm:
Alexi’s ads are nothing short of brillant. He is taking a negative hit, getting out in front of it and defining it as a great success rather than a huge failure. Outside of the insiders, the first thing the remaining voting public are going to hear about this Bright Start thing is what a great job Alexi is doing. This is nothing short of politics 101. Define yourself before your opponent defines you.
- (618) Democrat - Monday, Jan 4, 10 @ 7:53 pm:
Vallas tells us that Hoffman is a fierce Independent. Like Joe Lieberman? We Illinois Democrats don’t want another fierce Independent in the U.S. Senate like Joe Lieberman. We want a Senator who will support our Democrat values and support our President.
The entire time Hoffman is talking Vallas is looking at the floor. Kinda strange I think. Vallas then stumbels through the prepared written text.
Wow, what a great endorsemnet from a person who lives in another state.
- Chicago Cynic - Monday, Jan 4, 10 @ 7:56 pm:
South of 74,
Can’t argue with you that it’s what he’s trying to do. But good grief, does he really have no grasp that his actions directly hurt thousands of working families across Illinois? That real people who scrimped and saved for years so their kids could have a better life were severely hurt by his incompetence and deception?
Maybe it’s good politics (though I think it runs an extremely high risk of backfiring), but it’s morally bankrupt and frankly just the kind of thing our state has become a laughingstock for.
There’s now a new picture in the dictionary next to the word “chutzpah.” It’s a picture of Alexi.
- Responsa - Monday, Jan 4, 10 @ 8:00 pm:
==he is…defining it as a great success rather than a huge failure==
south of 74 cites a familiarity with Politics 101, but apparently forgot about another old Politics 101 saw that says the coverup is almost always worse than the “crime”. It is highly unlikely that Alexi’s opposition is going to blithely allow him to define himself as a hero on this issue. Nor is this strictly an “inside politics” situation as south of 74 suggests. There are just too many real life unhappy Bright Start investor parents out there to allow this story to be redefined as a great success by Alexi. So, in addition to being vulnerable on the original investment oversight, with these new ads the senate candidate in question is also now vulnerable with respect to his credibility and truthfulness.
- Arthur Andersen - Monday, Jan 4, 10 @ 8:32 pm:
CFS, if you know that number “how much ‘Tugboat Annie’ lost”, AA and probably others would be interested in it.
Oh, and it looks like “yaya” (isn’t that Greek for “Scottie?”) has figured us all out. Not.
- Anon - Monday, Jan 4, 10 @ 8:36 pm:
Who votes in the primaries?
Not a lot of the general population, but many of the families that lost 1/2 their money for their kids who are headed for college in the next few years. The money was suppose to be in low risks investments.
No way Alexi is going to spin these parents into believing that what he did was a good thing. Not to mention that the money he did recover totally missed the past few month of market rebound so really they lost even more.
- Alex Carbo - Monday, Jan 4, 10 @ 9:28 pm:
A little tip for Hoffman:
Find every one of those families, put them in a room and roll the video. Game over.
- Chicago Cynic - Monday, Jan 4, 10 @ 9:47 pm:
I suspect these Alexi ads may arouse the anger of those who lost money and motivate them to come forth publicly.
- Paul S. - Monday, Jan 4, 10 @ 10:05 pm:
I have to agree with what was previously posted. It doesn’t matter what a press release says, the majority of the voters will see the television ads. If Hoffman doesn’t put out an ad, no one will notice his point. It’s a tv war, not a war of the words.
- Anon - Monday, Jan 4, 10 @ 11:52 pm:
Lost cause with Hoffman. He won’t pull in the final vote in the general. Once Jewish voters, especially older Jewish voters, and progressives find out he worked for Rehnquist he’s toast. Rehnquist was a total anti-semite and when older Jews find out that a person who claims to be a Jew worked for Rehnquist the backlash will be heard in D.C.
Blago connections and Rehnquist connection will bring the Dems down. Surely there is a Dem candidate that is free is of all those connections.
- Mark S. Allen - Tuesday, Jan 5, 10 @ 1:35 am:
Alexi met with Black grassroots groups for over a year working out for new public policies tom increase access to capital to Black and poor communities, and yet NONE of the forty or so groups were even invited to his campaign announcement and to this day seems to be searching for bullet points for his media with Black voter while still ignoring what some thought was a big issue with increasing capital to Black communities.
Cheryle Jackson preparing to meet with Southside community activists Wednesday, who just committed to 500 street workers.
- Yellow Dog Democrat - Tuesday, Jan 5, 10 @ 8:27 am:
Funny how Hoffman seems to think that the problem is Alexi, not Oppenheimer, which misled investors across the nation, bond rating houses, and even federal regulators.
Here’s what Morningstar analyst Greg Brown told Bloomberg’s:
Greg Brown, an analyst at research firm Morningstar Inc. in Chicago, said the fund’s risk profile “changed rather quickly and due to the delay in regulatory filings, it was difficult to stay on top of the fund — especially when Oppenheimer did not adequately disclose the risks and leverage they were using.”
Hoffman accuses Alexi of only wanting to accept responsibility of the good things that come on his watch, but it seems to me that Hoffman wants to blame everything that Wall Street did wrong on Alexi.
Which really makes me wonder whether, as a U.S. Senator, Hoffman would support tougher regulation of the financial services industry. His philosophy seems to be “Buyer beware.” That’s not much comfort to the millions of Illinois families and retirees outside of the Bright Start Fund who saw their life savings evaporate before their eyes a year ago.
- VanillaMan - Tuesday, Jan 5, 10 @ 8:48 am:
Alexi’s ads are nothing short of brillant. He is taking a negative hit, getting out in front of it and defining it as a great success rather than a huge failure.
That isn’t being brilliant. That is being dishonest.
- downstate hack - Tuesday, Jan 5, 10 @ 9:04 am:
Alex adds may be deceiving, but politically brilliant. What’s new? This is Illinois and he is an Illinois politician.
- Chicago Cynic - Tuesday, Jan 5, 10 @ 9:27 am:
YDD, the overwhelming majority of the losses happened after Alexi met with Oppenheimer in April 2008 and knew of the higher risk profile of the fund. He didn’t inform those who had invested in Bright Start or were continuing to invest that it had become a risky investment.
That is just a fact and it is undeniable. That’s why Hoffman blames Alexi and that’s why the voters should too. It’s not just that it happened on his watch. It’s that he failed to do anything about it once he knew and that he failed to tell people as their money was going down the tubes. That’s just a failure to do his job.
- Chicago Cynic - Tuesday, Jan 5, 10 @ 9:30 am:
Oh, and anon 1152, you’ll find an awful lot of Democrats and an awful lot of Jews were clerks for Rehnquist. Personally I know three liberal Democratic Jews who were clerks for Rehnquist. When you get a chance to clerk for the Chief Justice of the U.S. Supreme Court, you do it. It’s a great honor regardless of who is the Justice.
This is a bogus issue.
- Loop Lady - Tuesday, Jan 5, 10 @ 9:48 am:
Alexi is a highly charismatic pol who let middle class parents and their kids down in a totally unforgiving economy with a “no lose” college savings plan…now how exactly does this make him qualified to serve in the US Senate? Doh!Nevermind, he’ll fit right in…
- Sonic Infidel - Tuesday, Jan 5, 10 @ 9:50 am:
Giannoulias announced the $85 million figure on Jan. 26, 2008. On Dec. 22, 2009, he announced the settlement and that 2009 losses brought the total to $150 million. The first announcement was almost two years before the second. Was he supposed to predict the future here? You can’t announce 2009 losses before they happen, so I don’t really see why this is an issue.
- Where's My Money, Giannoulias? - Tuesday, Jan 5, 10 @ 9:57 am:
Yellow Dog -
I agree with you that Oppenheimer deceived Illinois taxpayers.
Why isn’t Lisa Madigan going after them? Why isn’t she fighting for the hard working families of Illinois in this case?!?
- Obamas' Puppy - Tuesday, Jan 5, 10 @ 10:03 am:
Paul Vallas probably met Hoffmen 5 minutes before this press conference. Send the receipt to Axelrod co. Paul. Now Hoffman can justify writing the last check when he gets 15% in Feb.
- wordslinger - Tuesday, Jan 5, 10 @ 2:05 pm:
Alexi’s getting a pass in the primary. His ads are great, and no one is hitting back. He was ripe for a negative takedown.
Hoffman is a terrible candidate, a washout. His ads are awful. He was on WGN tv news yesterday and it was five minutes of deer-in-the-headlights. Painful.
I wish Jackson could raise money money to run her Afghanistan spot again. It was a winner, to me. Unfortunately, unless you’re close with a member of the armed services, it probably doesn’t resonate. It’s just other people doing a nasty job with borrowed money. Very sad.