American Federation of State, County and Municipal Employees flak Anders Lindall told the Illinois Radio Network last week he believes that Illinois corporate executives are engaging in a diabolical conspiracy to profit from Illinois bonds receiving a lower credit rating.
“These powerful CEOs and lobbyists are going behind closed doors to try and drive down the state’s credit rating and drive up the state’s borrowing costs,” Lindall said.
First of all, Anders, it is hardly behind closed doors. Ty Fahner, head of the Civic Committee of the Commercial Club, has publicly said some of his members have done this.
Secondly, there is nothing wrong with executives providing information to rating agencies, just as there would be nothing wrong with labor unions, investors or others doing the same.
Lindall says that maybe these corporate suits own Illinois bonds and want the credit rating to crater so they can collect a higher interest rate on the bonds they secretly own.
Earth to AFSCME: It’s about the fundamentals.
A stock or bond is worth what it is worth.
If a bond issuer like the state of Illinois is deep in debt, not paying bills on time and struggling to meet its pension obligations, it’s going to have a pretty terrible credit rating.
What bothers me more about this “controversy” is that it is a distraction from the problem at hand – the state has the worst-funded pension system in the nation. That’s why Illinois has the worst credit rating in the nation.
And let’s not forget that the state government was sanctioned by the Securities and Exchange Commission for lying about its financial condition to potential investors and artificially bumping up its credit rating.
Rating agencies need as much information from as many sources as possible – particularly when the bond issuer hasn’t been honest.
AFSCME would be wise to remember the old adage: “When you point your finger at someone, you have three fingers pointing back at yourself.”
Illinois has lousy credit because for too long politicians have kowtowed to the demands of government worker unions in the areas of pensions and salaries.
Illinois’ bond rating ranks last in the nation for the simple reason that it deserves it.
On the other hand...
Here is what Mike Madigan’s spokesman Steve Brown had to say back in January about the perception of a “conflict of interest” if Lisa Madigan were to run for governor:
“That was effectively dealt with 10 years ago when voters overwhelmingly elected Lisa to attorney general. She has worked well with the speaker. There have been good outcomes on credit reporting and mortgage fraud. Voters have put both Madigans in positions of power. With good outcomes. There’s no conflict.”
But recently, Attorney General Madigan held a news conference where she said she wasn’t running for governor because it would be a conflict of interest for her to serve as governor while her father serves as speaker of the House.
So how isn’t it a conflict for her to serve as attorney general?
Don’t get me wrong, she has done some good things as attorney general, particularly in the area of reforming the state’s Freedom of Information Act.
But there are inherent conflicts with having the state’s top legal officer being the daughter of speaker of the House.
For example, several years ago then-Gov. Rod Blagojevich came up with a squirrely scheme to sell the James R. Thompson Center to a French bank and then rent it back.
Mike Madigan was skeptical of the idea at the time. A legal opinion was asked of the attorney general and she backed her father’s point of view.
Suddenly Blago crowed that she was carrying water for her Daddy.
To my way of thinking, the legal opinion was right on the money. But there was a conflict none the less in that she was offering a legal opinion on a conflict between her father and the governor.
Ultimately, Brown is right. It is a matter that the voters have to decide.
But the question remains: How is it any less of a conflict for Madigan to be attorney general than governor?