Last March, the president of the influential and heavily corporate CEO-populated Civic Committee of the Commercial Club of Chicago told a long and involved story.
The tale was about how he and some members of his group had tried to browbeat the New York credit ratings agencies into lowering Illinois’ bond ratings. The ratings hadn’t yet plummeted to where they are now, so the idea was to use ratings cuts to put pressure on Illinois to enact a tough pension-reform law that drastically reduced benefits for current and future public employee retirees.
There were a “couple” of interactions on the phone, he told his Union League Club audience, and “in one case it was in person.”
“How in the hell can you guys do this?” Ty Fahner summed up the gist of the argument made to the ratings agencies. “You’re an enabler to let the state continue.”
Fahner said he believed the calls had stopped because, he said, he and the Civic Committee members “don’t want to be the straw that breaks the back.”
He also appeared to take some credit for the ratings downgrades. “But if you watch what happened over the last few years, it’s been steadily down. Before that, it’s been the blind eye.”
But then, after I’d written about his speech in the Sun-Times and on my CapitolFax.com website, Fahner wrote me to say he made it all up.
“You gotta be kidding me,” was my initial reaction after I read his e-mail to me last week. That was a pretty darned complicated story to just invent on the fly.
“I misspoke,” Fahner wrote. “I didn’t call the ratings agencies, nor did any of our Civic Committee staff.” He later clarified that he knew of nobody at the Civic Committee who had ever “contacted the rating agencies to urge Illinois be downgraded or for any other reason.”
Yep. It was all just a fantasy, kinda like that time on “Dallas” when Patrick Duffy’s character Bobby Ewing was killed off and then Duffy decided a few months later that he wanted to return to the show, so the producers announced that the entire season had just been a bad dream by Pamela Ewing, Bobby’s wife, played by Victoria Principal.
I’m not sure if Fahner is Bobby Ewing or Pamela, but Fahner’s comments had definitely become a nightmare.
Fahner’s law firm currently has a contract worth as much as $2 million to — irony of all ironies — handle the state of Illinois’ bond work. So, if Fahner was telling the truth back in March, he was boasting about advocating against one of his firm’s big clients. Also, the current chairman of Fahner’s law firm is a Civic Committee member. Not to mention that many of the big financial CEOs who are Civic Committee members run companies that do lots of Illinois bond business.
Fahner is no average Joe. He is a former Illinois attorney general. The Civic Committee he runs is loaded with corporate titans. The guy has clout.
A pension-reform bill that Fahner wholeheartedly supported could’ve passed months ago, but Fahner refused to agree to a compromise. Senate President John Cullerton offered to construct a bill that would allow Fahner’s more draconian pension reforms to take effect, but if the courts struck the language down as unconstitutional, then Cullerton’s rival proposal would kick in.
In perhaps the most frustrating moment during the three long years of agonizing pension-reform battles, Fahner’s opposition pulled Senate Republicans off the bill, which doomed it to failure.
And here we sit today with nothing. No pension reform. Nothing.
Thanks, Ty.
Pleasant dreams.
- Amalia - Monday, Aug 12, 13 @ 9:11 am:
Awesome column. congrats on the move to the Sunday paper!
- CircularFiringSquad - Monday, Aug 12, 13 @ 9:13 am:
Speaking of Illinois Rich Guys here is some more heartwarming news on our favorite Wall Street bankers…..
“Prosecutors and F.B.I. Examine JPMorgan Over Losses
The DOJ prepare to charge criminally two former JPMorgan Chase employees suspected of misrepresenting a multibillion-dollar trading loss last year, prosecutors in Manhattan are separately exploring ways to penalize the bank over the trading blowup that has come to be known as the “London Whale.”
The investigation, according to people briefed on the matter, could yield a fine and a reprimand of the bank for allowing the suspected wrongdoing to occur.
The action would come in addition to civil charges from the Securities and Exchange Commission, which could announce a settlement with the bank as soon as this fall.
former employees. The charges, which could be announced as soon as this week, hinge on the suspicion that the employees masked the size of the trading losses as they spun out of control.
The losses, which have now reached more than $6 billion, stem from a huge bet on the health of large corporations like American Airlines. to an asset like corporate bonds.
It is unclear whether authorities will arrest Mr. Martin-Artajo and Mr. Grout right away. Although they could ultimately be extradited under an agreement with British authorities, Mr. Grout is living in his native France, which typically does not extradite its citizens.
Yet Mr. Grout’s lawyer, Edward Little, explained that the former trader was not running from the case. Mr. Grout, who lost his JPMorgan job last December, left London this year after struggling to find new employment. He briefly spent time this summer in the United States, where his wife’s family lives.
Mr. Grout moved back to France long before media reports last week suggested that he would face charges, Mr. Little said. “He has absolutely no intention of fleeing.”
The investigations in Manhattan are playing out at a challenging moment for JPMorgan, whose once-stellar reputation was undercut by a swirl of regulatory problems.
In the aftermath of the trading loss, for example, regulators swarmed the bank. Already, the bank’s main regulator, the Office of the Comptroller of the Currency, has ordered it to improve internal controls.
Now JPMorgan is in settlement talks with the Securities and Exchange Commission, which could fine the bank for lax controls that allowed the traders to undervalue the bets, the people briefed on the matter said. In an unusually aggressive move, the S.E.C. is seeking to extract an admission of wrongdoing from the bank, reversing a longtime practice at the agency, which has allowed defendants for decades to “neither admit nor deny wrongdoing.”
The Financial Conduct Authority, a British regulator, also plans to fine the bank in the coming months, one person said. The Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and state regulators in Massachusetts continue to investigate the losses as well.
Yet the scrutiny of JPMorgan goes far beyond the trading losses. Prosecutors in Manhattan are also examining whether JPMorgan did not alert authorities to suspicions about Bernard L. Madoff, according to several people with direct knowledge of the matter. Poring over internal bank e-mails — documents from more than a year before Mr. Madoff’s 2008 arrest that suggest some employees believed his returns were part of a Ponzi scheme — the government suspects JPMorgan violated a federal law requiring banks to report questionable activity to authorities, the people said.
Still, its tussles with prosecutors in Manhattan are hardly the only headaches for JPMorgan. The bank is contending with investigations from eight federal agencies and two foreign nations. Some of the scrutiny involves the bank’s financial crisis-era mortgage business. JPMorgan recently disclosed that federal prosecutors in California were examining whether the bank sold shoddy mortgage securities to investors in the period before the 2008 crisis.
NOW THE REAL FUNNY PART
Jamie Dimon, the bank’s chief executive, vowed to remedy relationships with regulators.
In a letter to shareholders, Mr. Dimon apologized for letting “our regulators down” and promised to “do all the work necessary to complete the needed improvements
- Frank - Monday, Aug 12, 13 @ 9:23 am:
I think he’s more like J.R.
- wordslinger - Monday, Aug 12, 13 @ 9:25 am:
Fahner’s “Dream” story is ridiculous. How did this guy get a big-hitter reputation, anyway.
Has Big Jim carried him all of his career?
- Robert the Bruce - Monday, Aug 12, 13 @ 9:28 am:
I love the imagery of Ty and the CEO’s of the Civic Committee as Illinois’ version of Dallas’ oil barons.
Maybe Ty should find a Cliff Barnes to blame for the phone calls.
- Loop Lady - Monday, Aug 12, 13 @ 9:30 am:
Congrats Rich. I am so glad your column runs in the Sun Times, not the Trib…to the post: everyone who could do something to solve the pension crisis and has not deserves all the bad press they get…
- JC - Monday, Aug 12, 13 @ 9:30 am:
Great column. Your work continues to be a beacon of light in this muddled issue that is heavily tilted toward the powerful and moneyed, pulling their strings for their own benefit. However, all taxpayers should start figuring out that the anger they may have toward pension fund contributors/recipients has been misplaced. Not only are they(public employees) the victims of theft but all these manipulations by very wealthy, powerful fat cats are intended to not only screw the public employees in the funds, but they’re working on screwing the general public as well.
You’ll never see the likes of this column in the Tribune which speaks volumes.
- Roadiepig - Monday, Aug 12, 13 @ 9:36 am:
Great op-ed piece Rich- thanks to you this major story has finally made it into one of the big two Chicago newspaper. Maybe your writing can motivate someone over at the (once influential) tribune? Not holding my breath …
- Anonymous - Monday, Aug 12, 13 @ 9:36 am:
Ha. Ty needs someone to whisper “you’re just a mortal” on a regular basis. The titans often fall by the hand of their own arrogance
- Frenchie Mendoza - Monday, Aug 12, 13 @ 9:44 am:
Stay on it, Ty.
You’re close to crossing that finish line in the race to the bottom.
- flea - Monday, Aug 12, 13 @ 9:45 am:
As a child, I recall trying to make up stories to persuade my MOM not to punish me for some transgression….she never bought it! If an ex- ATTORNEY General cannot be truthful about this matter, he should be dismissed by his peers on the high and mighty Civic Committee. The joke is on the folks who paid into the pension funds and the taxpayers of this great state. Whew!
- Louis G. Atsaves - Monday, Aug 12, 13 @ 9:57 am:
Great ending to a good column. Congrats on your move to Sundays at the Sun-Times, instead of Saturdays.
- kimocat - Monday, Aug 12, 13 @ 9:57 am:
Thanks Rich for keeping this story out there.
- Bemused - Monday, Aug 12, 13 @ 10:02 am:
It will be interesting to see if all we hear are crickets while waiting for other press outlets to comment on this story.
- Cod - Monday, Aug 12, 13 @ 10:05 am:
Ty Fahner is not a Lone Ranger. He was put in that position by the Civic Committee leaders as a point man to implement their strategy, which is to solve the State’s fiscal problems without going to a graduated income tax, without losing fabulous corporate tax loopholes and subsidies.
Fahner will likely be quietly removed, only to be replaced with version 2.0, programmed for a bit more discretion about what he reveals about dirty tactics.
Their strategic mission will not change.
- Chicago Cynic - Monday, Aug 12, 13 @ 10:08 am:
Thanks for putting the Dallas theme song in my head, but I actually think it’s more like a scene out of Wayne’s World when Wayne and Garth would wave their hands and do a fantasy ending. This is just as bogus as one of those.
He’s got a lot to answer for on this and, despite the fact that the Trib is ignoring the story, I suspect we haven’t heard the last of it.
- Ghost - Monday, Aug 12, 13 @ 10:13 am:
Great column! Where is. Cross on all of this, shouldn’t he demand an investigation as well
- Belle - Monday, Aug 12, 13 @ 10:20 am:
Terrific column—good job explaining something rather complex.
- low level - Monday, Aug 12, 13 @ 10:23 am:
Ty must regret now what he said about you ” finally focusing on the pension issue”. (paraphrasing ).
- siriusly - Monday, Aug 12, 13 @ 10:42 am:
Despite what you want us to think of you, you’re a very good and thoughtful writer Rich.
- 47th Ward - Monday, Aug 12, 13 @ 10:43 am:
If you’re going to bring up Dallas, maybe the better reference would have been “who shot Illinois’ credit rating.”
I bet there are more than a few blog readers wondering who Bobby and Pamela are. Dallas is older than a big slice of your readership.
- Oswego Willy - Monday, Aug 12, 13 @ 11:09 am:
Great read, Rich!
Ty is being exposed as someone chasing money for his firm, while doing everything he can to NOT have the best interest of Illinois in mind, as you would think a … Former Illinois Attorney General would defend the state, but I guess “Blue Horseshoe loves destroying Illinois’ Credit Rating”.
Ty is someone exposed who loves being “inside”, loves bragging about “connections”, but Ty hates being exposed as a lawyer working against a paying client, even if the client is Our State, and then bragging about doing it.
Dope!
- Tommydanger - Monday, Aug 12, 13 @ 11:14 am:
We’ve had state reps weigh in on issues presented in this blog. If any of them have been following this, I would be interested in knowing if this issue has anyone concerned in the GA. Hello?
- Norseman - Monday, Aug 12, 13 @ 11:31 am:
Rich, I too join the throng of folks praising your column.
Tommydanger - don’t expect any action, the legislators don’t want to irritate the big money men.
- RNUG - Monday, Aug 12, 13 @ 11:33 am:
Great column and mostly on point.
However, I kind of disagree on the merged pension ‘reform’ bill. Yes, they probably could have passed the “if not Madigan, then Cullerton” pension proposal but it wouldn’t have mattered. Both proposals were still an unconstitutional diminishment, primarily because there was no true choice offered, and would have ended up in court. Assuming past rulings were followed this time around, both portions of the bill would have been thrown out. Might have just taken two sequential lawsuits to do so.
We’d still be in the same place we are today, needing to raise revenue. The only difference is the GA would KNOW they had no other chocie …
- Anon - Monday, Aug 12, 13 @ 11:44 am:
Agreed….Great Column
Maybe another column topic could be….Ty Fahner “Tarred and Feathered” by Illinois citizens
- Rich Miller - Monday, Aug 12, 13 @ 12:35 pm:
===Dallas is older than a big slice of your readership. ===
I wanted to use an analogy that Ty might understand. Modern stuff might not work.
- The people of the great state of Illinois - Monday, Aug 12, 13 @ 1:26 pm:
Dear Mayer brown, you’re fired
- PrairieFire - Monday, Aug 12, 13 @ 2:11 pm:
I am attempting to be civilized and smart with my post here, but the only thing that seems apparent here is that Ty Fahner is a liar.
No one just makes up a story like that. He is attempting damage control on a serious transgression that could seriously jeopardize his job security at his firm and potentially his career as an attorney.
It is disgraceful that he spoke to bond-rating agencies about _lowering_ Illinois’s rating, even more so as a Republican official while a Democratic governor sits in Springfield (I don’t care how long ago he held office, once a politician, always a politician).
He should definitely be recommended for discipline by the American Bar Association. And, honestly, the State of Illinois should make a serious effort to steer its bond work to a different firm.
- PrairieFire - Monday, Aug 12, 13 @ 2:13 pm:
Link to the video found on preaprez.wordpress.com.
https://www.youtube.com/watch?v=BHV2Gte4aWw
- Anonymous - Monday, Aug 12, 13 @ 2:17 pm:
=== Fahner “Tarred and Feathered” by Illinois citizens ===
I feel so sorry for Ty. You wouldn’t want this to distract him from his efforts to trash public workers would we now.
- Concerned - Monday, Aug 12, 13 @ 2:21 pm:
The problem is not enough people are hearing this news story. It will eventually die down and be forgotten. When some of the most powerful politicians, business people, and even the most powerful news organization all collude to manipulate the people of illinois, it becomes a long shot to hold them accountable.
- wordslinger - Monday, Aug 12, 13 @ 2:27 pm:
To my knowledge, not one officeholder anywhere has said “boo” about any of this.
Not even after the We Are One coaltion, representing one million citizens, has repeatedly called for an investigation.
But let’s continue the right-wing fantasy that the unions run the show in government.
- Norseman - Monday, Aug 12, 13 @ 2:46 pm:
Sorry, Anon 2:17 was me.
- Anonymous - Monday, Aug 12, 13 @ 2:46 pm:
Just read that U of I and other public universities have had their ratings downgraded.
- PublicServant - Monday, Aug 12, 13 @ 3:08 pm:
===Just read that U of I and other public universities have had their ratings downgraded.===
Thanks Ty! May we have another?
- Old and In The Way - Monday, Aug 12, 13 @ 5:23 pm:
RNUG
You are right on target. At some point someone or some legislative body is going to have to come to the realization that we have a poor revenue system in the state. Even if they successfully cut pensions it will not solve the fundamental problem. I suspect that the ISC at some point will have to reinforce this. Our first hint may well come in early October since oral arguments on the Maag suit are in September.
- Just The Way It Is One - Monday, Aug 12, 13 @ 6:47 pm:
Spectacular piece, sheer and simple. And just a fabulous, witty reference to the Dallas TV Show’s escapade at the time!
To be sure, Ty Fahner’s back-and-forth mambo dance, as well as his unyielding stridency on the Pension mess, as you’ve reported it in great detail over many months, has not only been sickening to observe, but an outright–and obviously, a SERiously harmful–disservice to the good People of Illinois as a nearly $100 BILLION Crisis, which EACH of us is paying for in loss of substantial monies for other vital Services spawning fights, bitterness of Illinoisans and Elected Officials alike, not to mention high profile Gubernatorial Vetoes and Lawsuits–increasingly grows worse to the tune of several million$ every DAY!!!
The Civic Committee should be ashamed of such dreadful conduct–as well as the CC of Chicago on the whole…!
- Nick - Tuesday, Aug 13, 13 @ 7:31 am:
Ty was also the Director of the IL State Police for a period of time. Does anyone if he is collecting a state pension?
- JC - Tuesday, Aug 13, 13 @ 8:27 am:
Glad Nick brought that up. How much exactly, does Ty get in public pensions for his work in service? Where does one find that info? Teachers salaries, pensions are made abundantly available. What about old Ty’s?
- RNUG - Tuesday, Aug 13, 13 @ 9:02 pm:
Nick / JC,
I checked the ‘Open The Books’ web site and he is not listed as drawing a pension. Three possibilities come to mind: (1) he drew his money out when he was no longer a state employee, (2) he hasn’t ever applied for his pension, or (3) he didn’t have the minimum 8 years for a pension.