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* Kate Grossman is a member of the Sun-Times editorial board. Her blog post about Ty Fahner is spot on and looks like it was written as an actual editorial. Obviously, I wish it had made it into the paper…
“Regarding my comments at the Union League Club in March, I misspoke,” Fahner wrote to Miller. “First, while I may have said so, I didn’t call the ratings agencies, nor did any of our Civic Committee staff. My response to the questions was very confusing and inarticulate.”
I reached out to Fahner on Thursday but didn’t hear back.
Perhaps Fahner was exaggerating before the Union League Club. Perhaps he did make the calls and now he realizes how that looks in the light of day.
Here’s what really matters: Fahner clearly thought this was a good idea — and on that we strongly disagree.
We get the impulse. We’re as frustrated as anyone with state lawmaker’s inaction on pension reform and are always looking for a way to light a spark.
But deliberately putting your own state at risk — even if it’s a means to a more positive end — borders on traitorous.
If the Civic Committee did reach out to credit agencies, it was behind closed doors, with no public say or input. Even more importantly, the public pays for those downgrades with its tax dollars.
In his Union League comments, Fahner made clear he was trying to be responsible. Fahner said he and his colleagues backed off their push with the rating agencies because they didn’t want “to be the straw that breaks the back….We’d done all we could on that that is responsible…it would be irresponsible for the biggest employers in the state – which is who the civic committee is … - to go and basically inflict that on the people that work for them. So we’re trying to work the political process.”
We’re glad to hear they struggled with this — whatever it is they did or didn’t do.
But the bottom line remains the same: these means do not justify the ends.
Exactly right.
posted by Rich Miller
Friday, Aug 9, 13 @ 9:53 am
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What was Mayor Emanuel’s role in all this?
Did he speak against it when he became aware?
If Rahm Emanuel did participate in this campaign, should he still be Mayor of Chicago? Or should he be removed from office for acting contrary to the interests of the City of Chicago?
Comment by Carl Nyberg Friday, Aug 9, 13 @ 10:03 am
Rich - Can’t we even get Huffington Post to pick up on this story?
Comment by kimocat Friday, Aug 9, 13 @ 10:07 am
his original comments were quite specific.
now he says he didnt call, and staff didnt call. but that leaves board members and their employees.
not a very well written dodge.
Comment by langhorne Friday, Aug 9, 13 @ 10:08 am
About time someone else but Rich looked under this rock.
Huffington Post did something a few days ago. About halfway down the link.
http://www.huffingtonpost.com/matthew-dietrich/income-tax-debate-takes-c_b_3653353.html
http://www.huffingtonpost.com/matthew-dietrich/income-tax-debate-takes-c_b_3653353.html
Comment by wordslinger Friday, Aug 9, 13 @ 10:11 am
=== and staff didnt call. but that leaves board members and their employees.===
Actually, he said in a follow-up that as far as he knew, nobody connected to the Civic Committee did anything. I posted that, but you apparently didn’t see it.
Comment by Rich Miller Friday, Aug 9, 13 @ 10:13 am
Thanks, Rich, for staying on this story. I can’t predict what will ultimately come out of this, but it’s important for people to know that the people who are yelling “fire” in a crowded theater about the state’s finances and are unwilling to compromise with the workers who will be directly affected by their reform ideas may be the ones actually helping to ruin the state.
Comment by Grandson of Man Friday, Aug 9, 13 @ 10:15 am
Preach, Kate.
Comment by Soccermom Friday, Aug 9, 13 @ 10:17 am
“borders on traitorous” borders on too harsh
Despicable, yes. The Civic Committee should take a lot of heat for this, but criticizing your government shouldn’t rise to the level of “traitorous”. The 1st Amendment freedoms are too important to treat lightly.
Sorry for the pickiness. The rest of the column is excellent.
Comment by walkinfool Friday, Aug 9, 13 @ 10:21 am
==the ones actually ruining the state==
For OTHERS, not themselves. They are so well insulated that nothing much could bother them (financially, that is). Democracy or plutocracy?
Comment by JC Friday, Aug 9, 13 @ 10:24 am
Fahner expressed his strong opinion that our state is heading in a bad direction and that our bonds were over-rated due to politicians failure to address the underlying issues.
Some may say that “borders on traitorous”.
Others may say that was being a responsible civic leader by telling the truth as you believe it to be and attempting to force the hand of lackadaisical leadership in Springfield towards action.
As the old cliche goes, “One man’s terrorist is another man’s freedom fighter”.
Comment by Keep Calm and Carry On Friday, Aug 9, 13 @ 10:29 am
Gee, to my memeory, there was a time when calling someone a “traitor” made you guilty of McCarthyism and therefor “un-American”. As usual, it depends whose ox is being gored.
Comment by Conservative Republican Friday, Aug 9, 13 @ 10:30 am
“the means do not justify the end”?
You mean telling half truths and skipping important facts when talking to reporters and crafting (what would likely be found to be)unconstitutional bills for your lackey state reps to try to push through the house and senate to keep your personal income taxes lower than the surrounding states is not a good enough reason to put pressure on “unbiased” ratings agencies?
Seems perfectly logical and moral to me…
Comment by Roadiepig Friday, Aug 9, 13 @ 10:31 am
Comparing Karen Lewis, a large African-American woman, to a large ape? Didn’t Jimmy the Greek lose his broadcasting job because of a similar comment?
Comment by ExPress Friday, Aug 9, 13 @ 10:31 am
Correcting myself … it was Howard Cosell who made the “little monkey” comment. Sentiment stands, though.
Comment by ExPress Friday, Aug 9, 13 @ 10:42 am
Dillard’s in a pickle regardless of which end he stands near in the pic.
You either get “Dill” or “Lard”.
Comment by Keep Calm and Carry On Friday, Aug 9, 13 @ 10:43 am
Given their silence on the Fahner caper, Quinn, Madigan, et al should have the good grace not to use the excuse that pensions need to be fixed so the bond rating won’t be lowered.
Comment by Anonymous Friday, Aug 9, 13 @ 10:51 am
@Walkinfool - I completely agree. The US Constitution is very important. Please see Article I, section 10, clause 1. Thanks in advance.
- The middle class
Comment by PublicServant Friday, Aug 9, 13 @ 11:22 am
@Wishbone - Did you have your white hood on when you made your “perfect image” post, dude?
Comment by PublicServant Friday, Aug 9, 13 @ 11:24 am
Oh for god’s sake. Traitorous?
This is the dumbest of dumb stories and everyone writing about it needs to breathe in a bag for a while.
Comment by Will Caskey Friday, Aug 9, 13 @ 12:22 pm
Will, that ain’t what you said the other day.
Comment by Rich Miller Friday, Aug 9, 13 @ 12:46 pm
Also, old buddy, bite me.
Comment by Rich Miller Friday, Aug 9, 13 @ 12:51 pm
@Will 12:22
You think it’s dumb if they financially benefited from the lower bond ratings? You think it’s dumb that Fahner/Mayer Brown and Waddell/Nothern Trust had a fiduciary responsibility to the State of Illinois as Bond Counsel and Underwriter, and broke that fiduciary trust by lobbying against their client (Illinois) to the ratings companies to lower their client’s bond ratings? You think it’s dumb that they may have even financially benefitted from their actions?
Yes, their actions are traitorous.
Traitor: : one who betrays another’s trust or is false to an obligation or duty. (From Merriam Webster’s website)
Comment by KurtInSpringfield Friday, Aug 9, 13 @ 12:55 pm
Will, you can bite me, too.
When the former attorney general and partner in the firm that does state bond counsel work publicly brags about undermining his clients position, it’s a story.
When he tries to walk it back, it’s a story.
Trolling for clients, dude, or do you already have some on the line?
Comment by wordslinger Friday, Aug 9, 13 @ 12:56 pm
Fahner & his Civic Committee biddies act in financial self interest and then deny it? I’m shocked. The tape of his comments should be played every time the Trib editorial board decries the financial cost of the pension problem. They aren’t motivated to help the State (and us) as much as themselves.
Comment by Diogenes in DuPage Friday, Aug 9, 13 @ 1:04 pm
The other day I said Fahner’s reaction makes it seem like he did something bad. I also said I was pretty blase about the story. The two aren’t in conflict.
If he yelled at ratings firms to downgrade IL, so what? It’s not like muni unions don’t yell at them to NOT downgrade, plus if that had any nonzero influence on the ratings then they are already such a fundamental joke that what Fahner did/did not say is somewhat irrelevant.
Comment by Will Caskey Friday, Aug 9, 13 @ 1:09 pm
=== I also said I was pretty blase about the story===
Yeah, until you saw the walk-back.
===plus if that had any nonzero influence on the ratings then they are already such a fundamental joke that what Fahner did/did not say is somewhat irrelevant.===
Well, aren’t we the high and mighty?
You are attempting to shut down debate on two different posts today using nonsensical reasoning. Enough.
Comment by Rich Miller Friday, Aug 9, 13 @ 1:12 pm
The rating agencies are for-profit corporations, and they are dependent on the big corporate bond issuers who pay them. When the president of the biggest corporate business club in Illinois demands something, the agencies do as they are told.
Even if it hurts taxpayers.
And some here say there is nothing wrong with that?? Yikes.
Comment by Cod Friday, Aug 9, 13 @ 1:15 pm
–It’s not like muni unions don’t yell at them to NOT downgrade,–
You’re aware of some contact between unions and rating agencies?
You’re not really clear on how this stuff is supposed to work.
I think you need to brush up on what the role of rating agencies are supposed to play in the marketplace, and how their processes and criteria have come into question in recent years.
Comment by wordslinger Friday, Aug 9, 13 @ 1:17 pm
@Will 1:09
==If he yelled at ratings firms to downgrade IL, so what?==
Because he/Mayer Brown had an obligation to his/their client, Illinois. Plus there is the potential financial benefit to doing so in conflict to that obligation as I stated in my previous posts.
And obviously he thought they had influence because he bragged about the ratings going down after they started contacting the ratings companies. Plus those ratings did cost Illinois in higher interest rates, so it’s no joke. That’s what!
Comment by KurtInSpringfield Friday, Aug 9, 13 @ 1:19 pm
Add me to the “bite me Will” brigade. Kate and Rich are absolutely right about this one. The head of one of the most influential civic organizations announces that he deliberately tried to push a downgrade against the interests of his state and his organization but potentially in the financial interests of his law firm? Yup Will, you’re right. Nothing to see here…move along.
BTW, I note that we still have crickets from the Tower. Amazing.
Comment by Chicago Cynic Friday, Aug 9, 13 @ 1:26 pm
“You think it’s dumb if they financially benefited from the lower bond ratings?”
What about those who may financially benefit from higher bond ratings or just maintaining existing ratings? There are a lot of those individuals out there, individuals expressing their opinions privately and/or publicly just like Fahner.
In fact, there may even be members of the Civic Committee who fit that exact description. Whouldathunkit? Looks like we have to investigate them all.
Comment by Keep Calm and Carry On Friday, Aug 9, 13 @ 1:32 pm
Ty is obviously lying about one of his two statements for his own benefit. That makes it fair game in my book.
Comment by Norseman Friday, Aug 9, 13 @ 2:42 pm
Rich
My thoughts while watching posts on this subject go like this.
Who in the media decides what is or is not a story?
How high up in a News Organization is that decision made?
Are calls being made behind the scenes by people of power to certain people saying this does not merit attention?
Or is this just not “News Worthy”?
Either my feeling that this should be of a front page nature is wrong or there is a strange aroma in Denmark.
Comment by Bemused Friday, Aug 9, 13 @ 2:48 pm
@walkinfool - “borders on traitorous” borders on too harsh
Despicable, yes. The Civic Committee should take a lot of heat for this, but criticizing your government shouldn’t rise to the level of “traitorous”. The 1st Amendment freedoms are too important to treat lightly.
The traitorous act was the direct demand (which now allegedly didn’t even happen) that the credit agencies purposefully do harm to the State of Illinois by downgrading our credit rating.
Using speech to incite a riot or cause panic is not “free” speech. I don’t consider using speech to undermine the full faith and credit of the state to be “free” speech either. Similarly harmful.
There’s a huge difference between penning a newspaper guest editorial suggesting agencies might consider downgrading the state’s credit rating vs. calling those agencies directly albeit behind closed doors and demanding they do so.
Comment by A. Nonymous Friday, Aug 9, 13 @ 3:11 pm
@Keep Calm and Carry On:
The financial benefit I am talking about isn’t just in higher interest returns from owning IL bonds.
Fahner/Mayer Brown and Waddell/Nothern Trust were in a unique situation. They may have benefitted financially by doing business with IL as Bond Counsel and Underwriter, and at the same time violating that trust by undermining their client’s standing with the ratings companies. And even if they did not, they still had a fiduciary duty, of which they were derelict, to Illinois in those roles.
Comment by KurtInSpringfield Friday, Aug 9, 13 @ 3:44 pm
Some people seem to be laboring under the notion that the rating agencies just pick up the phone or take meetings with anyone who wants to have a chin-wag about a particular issuer’s rating.
That doesn’t happen, at all. It would violate the integrity of the ratings process, which is supposed to be based in fact-driven criteria, not outside political or financial interest. Hence, newsworthy, when it is revealed.
And trying to knock down a rating, of your firm’s own client, when you’re a former attorney general and a “civic leader,” to advance your own political agenda on one of the biggest issues of the day — also newsworthy.
Read what’s going on with S%P and the private-brand mbs bundlers — they’re furiously spinning damning emails that appear to show that outsiders influenced ratings.
If it’s shown that occurred, S&P goes the way of Arthur Anderson.
Comment by wordslinger Friday, Aug 9, 13 @ 3:47 pm
=The financial benefit I am talking about isn’t just in higher interest returns from owning IL bonds.=
Plus, how many bondholders can call and effectively lobby the ratings agencies to lower the ratings to raise the interest rates on the bonds held by those bondholders, or after the ratings are lowered, go out and purchase those bonds. If it’s not illegal, it should be! It would be similar to insider trading.
Comment by KurtInSpringfield Friday, Aug 9, 13 @ 3:52 pm
I kinda sat back watching…
I am of the thought Ty is desperate to try to unring a bell, and it took a week for Ty to send a Dopey email, filled with a lack of respect to Rich, while trying to deflect the utterly disappointing that Ty wanted to “impress”(?) his audience how he and the CC went about to … RUIN … The state’s credit, as his firm is suppose to …. look out(?) … For the state.
“Traitorous”? If your firm is doing one thing for the good of Illinois, and you … Brag… about (allegedly) undermining your Firm AND the state of Illinois, the yes, “traitorous” is what it is.
Pathetic is what you call bragging about it, and weasel-like is what you call trying to unring the bell exposing it.
Dope.
Comment by Oswego Willy Friday, Aug 9, 13 @ 4:05 pm
Well said Willy. That’s why I’m voting for you.
*** Oswego Willy for Governor - He’ll let Rich ask him questions. ***
Comment by Norseman Friday, Aug 9, 13 @ 4:11 pm
A Nonymous: I fully understand your points, and called the CC’s actions and intent “despicable”. I also agree with the rest of of the original column.
IMHO we should have a higher hurdle before calling someone a “traitor”. That word has become too commonly used in political discourse.
Comment by walkinfool Friday, Aug 9, 13 @ 4:12 pm
walkin - it’s called hyperbole. Ty is an expert in hyperbole. Nobody is going to put Ty up against the wall and shoot him.
Bottom line is that he’s a sleaze.
Comment by Norseman Friday, Aug 9, 13 @ 4:15 pm
RE: Keep Calm and Carry On - Friday, Aug 9, 13 @ 1:32 pm:
It is accepted practice for a corporation or institution to cajole and “talk up” their own bonds to the rating agency(s) they hire and pay for. The Civic Committee action is entirely different for the reasons that have been cited before.
Comment by Cod Friday, Aug 9, 13 @ 4:15 pm
–It is accepted practice for a corporation or institution to cajole and “talk up” their own bonds to the rating agency(s) they hire and pay for.–
An issuer gets an opportunity to make a presentation and answer questions. But it’s pretty meaty data-driven stuff.
It’s not like opposing opinions are invited in.
Comment by wordslinger Friday, Aug 9, 13 @ 4:22 pm
Word,
your view is of someone representing the ratings companies. From my own experience, the other side seeking the best ratings possible for their bond issues firmly believe that the predictive assumptions about future scenarios that the data crunching is based on are not etched in stone.
Consider that the agencies gave mortgage securities the top ratings before the crash, and later rated US Treasuries a notch below.
They lowered Illinois bond ratings by changing an assumption, possibly in response to CC pressure, by claiming in effect that Illinois will default on bonds rather than resolve the fiscal deficits. Bond buyers laughed, and grabbed up those lower rated bonds faster than any before. And perhaps some were CC members.
Consider
Comment by Cod Monday, Aug 12, 13 @ 10:20 am