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Everyone has their own priorities

Tuesday, Jul 14, 2020

* Peter Hancock at Capitol News Illinois

A program that helps vendors get paid even when the state is late paying its bills might be in danger, the head of one financial company said, because of the way Illinois Comptroller Susana Mendoza is prioritizing the bills that she does pay.

The program is called the Vendor Payment Program and it allows third-party financial companies, known as “qualified purchasers,” to buy the debts owed to state vendors and then collect the late interest penalty owed whenever the state does pay the bill.

The problem, said Andrew Greta, president of Illinois Financial Partners, one of the program’s participating companies, is that Mendoza’s office has put a priority on paying off the principal owed on invoices so they stop accruing interest. But she only rarely, and sporadically, makes payments on the interest that is already due.

“They have been few and far between,” Greta said of the interest payments during an interview Friday.

Go read the rest if you can.

- Posted by Rich Miller        

19 Comments
  1. - @misterjayem - Tuesday, Jul 14, 20 @ 10:12 am:

    Perhaps some uncertainty is the burden that one must bear to get a 12 percent per year return on one’s investment.

    You want certainty?

    Buy a CD.

    – MrJM


  2. - All this - Tuesday, Jul 14, 20 @ 10:19 am:

    12% interest? Good heavens why are we paying 12%? Is this left over from a time when mortgages were 12%


  3. - Ron - In Texas - Tuesday, Jul 14, 20 @ 10:22 am:

    While a quick answer is to knock the investors here… Realize that these folks step in to pay a State vendor what they are owed when the state is not paying for really long periods of time. So long lots of them will stop supplying the state or go out of business.

    These folks actually offer a service to both the vendor AND the state. The state gets their products and services now… but pay later.

    If they cant make a buck on that, they stop doing it. Then the vendors stop providing services/goods and the state is in even worse shape.

    not good to just play the “screw the investor” game. more going on here.


  4. - Moe Berg - Tuesday, Jul 14, 20 @ 10:45 am:

    The Wall Street Journal says Baa rated corporate debt (and corporations don’t have taxing authority to derive revenue) is yielding 2.470% currently.

    Illinois GO bonds are ranked Baa3.

    The idea that anyone is complaining about getting 12%, or some high fraction thereof, ultimately, is as absurd as IL paying 12% in the present (and likely future) low interest rate environment.


  5. - Burton Mercer - Tuesday, Jul 14, 20 @ 10:46 am:

    This is an easy fix. Gov. Edgar can simply start a new company to purchase the obligations of Illinois Financial Partners.


  6. - Lurker - Tuesday, Jul 14, 20 @ 11:00 am:

    It should be noted the third party paid 90 cents in the dollar so they are receiving ten cents when bill paid. That is why they buy in bundles like they did for state fair when Rauner did not pay vendors.
    And the interest is 9% to match the interest paid to state for those not paying us (delinquent taxpayers)


  7. - Lurker - Tuesday, Jul 14, 20 @ 11:07 am:

    Ron in Texas reply:

    What almost all vendors to the state fair did was raise prices at least 10% after Rauner would not pay and they had to use VPP. Therefore they could break even. A lot of things that were a stable price for many years went up but things like DuQuoin fair were made much more expensive than needed.


  8. - Back to the Future - Tuesday, Jul 14, 20 @ 11:12 am:

    “Why are we paying such high interest rates?“
    Because the General Assembly and the Pritzker Administration don’t want to lower the interest rates.
    Glad Mendoza figured out a way to say us some money.
    Good for her and also good for Back.


  9. - Ron - In Texas - Tuesday, Jul 14, 20 @ 11:12 am:

    @Lurker
    Makes sense. But of course that means that the state is paying more, because they can’t pay on time.

    I just dont get folks mad at the VPP investors. I guess they would rather just see these vendors not get paid at all for 9 months and suffer that.

    I’ve had customers that wouldn’t honor our 90 day terms. Almost all cases we stopped doing business with them because we were essentially financing their purchases for 6 or more months. Not worth it


  10. - Abaddon - Tuesday, Jul 14, 20 @ 11:25 am:

    Let’s fire up those investigative journalism skills and let the good people know which esteemed Chicago public servants families owns these companies ?


  11. - Candy Dogood - Tuesday, Jul 14, 20 @ 11:56 am:

    All of these white men look like they can afford to get a nice hair cut and I find it difficult to find much sympathy for an entity that can throw $57,000,000 at a financing deal when they complain about the $4,000,000 they stand to make in interest being delayed.

    What, did they borrow the money hoping to leverage it for a quick profit once Illinois elected a more responsible Governor?

    They assumed the risks. Let them eat their cake.

    https://www.illinoisfp.com/about-ifp/board-of-directors


  12. - Anyone Remember - Tuesday, Jul 14, 20 @ 12:05 pm:

    Abaddon

    Didn’t know Jim Edgar was from Chicago. /s


  13. - the Patriot - Tuesday, Jul 14, 20 @ 12:10 pm:

    12% is low, most contracts provide for 1.5% per month or 18% per year.

    So wish Mendoza would run for Governor.


  14. - Back to the Future - Tuesday, Jul 14, 20 @ 12:34 pm:

    I have seen stories on these companies in the past. Team Pritzker and the General Assembly just ignore the problem.
    Like the high interest rates we pay on our state bonds, this is just another example of the failure of Springfield insiders to respect taxpayers interests.
    Good to the the Comptroller work in the taxpayers interest.


  15. - Abby Normal - Tuesday, Jul 14, 20 @ 1:46 pm:

    - - If they cant make a buck on that, they stop doing it. Then the vendors stop providing services/goods and the state is in even worse shape.- -
    Nobody says they shouldn’t make a buck. But at usurious rates? Only thing worse is payday loans.


  16. - Ron - In Texas - Tuesday, Jul 14, 20 @ 2:01 pm:

    @Abby Normal
    “Nobody says they shouldn’t make a buck. But at usurious rates? Only thing worse is payday loans.”

    Well seeing how they aren’t getting paid… are they making a buck. And as stated above 1-they will stop doing this if they have to wait 2 years for the money, and 2- its a service to the state that can’t pay its bills to its vendors. If they stop, vendors stop supplying services.

    The legislature WROTE the % into law. Now the lender is blamed for the %?


  17. - Candy Dogood - Tuesday, Jul 14, 20 @ 5:05 pm:

    ===Now the lender is blamed for the %? ===

    I’m not really sure lender is the most accurate title for a person that fronts money to specifically take advantage of a political and budget crisis created by a billionaire governor who made a boat load of his wealth from hedge funds, hedge funds which may or may not be reaping the benefits of that 12%.

    12% was intended to discourage the body politic from this practice, and Rauner helped make it a business opportunity for those who are already wealthy to exploit for an opportunity to make significantly more back on the deal at a rate that was very advantageous.

    Running into an unanticipated issue because the Comptroller has prioritized paying for the actual services and then the interest later seems like something they should have realized was a thing.

    “Lender.”

    Heh.


  18. - vendor - Wednesday, Jul 15, 20 @ 7:22 am:

    12 interest is simply not paid


  19. - Abaddon - Wednesday, Jul 15, 20 @ 9:33 am:

    This program, helping Illinois pay for things it can’t afford, started long before that goofy cuck Rauner came around.
    https://www.chicagobusiness.com/article/20130427/ISSUE01/304279975/vendors-step-up-to-pay-illinois-bills

    And it sure seems like most of the program participants are from Chicago.
    https://www2.illinois.gov/cms/About/VendorPayment/Pages/Apply.aspx

    And connected
    https://www.illinoispolicy.org/company-founded-by-political-insiders-received-over-22-million-from-illinois-in-vendor-late-fees/


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