I know, whodathunkit.
From the Sun-Times…
SPRINGFIELD-Illinois broke federal securities laws in misstating the true health of the state’s depleted pension funds when going out onto the bond market between 2005 and early 2009, the Securities and Exchange Commission announced Monday.
“Municipal investors are no less entitled to truthful risk disclosures than other investors,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement in a prepared statement.
“Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system,” Canellos said.
The municipal bond market could well be headed for a disaster. As I noted HERE, the world for states and cities will change if the Bankruptcy Court finds in favor of giving muni bond investors a haircut and/or in favor of not forcing them to meet their pension obligations.
If you think for even a second that the finances of the federal government are a mess (and they are), that problem is nothing compared to what’s going to happen at the local level where they don’t have the flexibility of a printing press.
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