Apr 9 2009
12:45 pm

Never wanting to let history* get in the way of scoring a political point, Bill Hobbs is blaming the Democrats for making this bond mess all happen.


There's plenty of fault to go around here. The munis should have been more educated about these investment vehicles. The comptroller should have put a bomb into the "I'm-educating-you-about-this-thing-I'm-selling-you" program. There should have been independent review of the swap approvals. Bass Berry & Sims shouldn't have been allowed to represent the state and Morgan Keegan at the same time, while being represented as an independent source for advice to the munis on the swap program. Morgan Keegan should have been subject to more stringent disclosure requirements. There should have been audits and review of bonds that had been approved by the comptroller's office. The legislature should have insisted on independent sources for education, sales, and legal review.

And both political parties share in the blame. No one thought to vote against the project in either party in either chamber, Sundquist signed it into law in 1999, Bredesen to implement it a few years later, Comptroller Morgan had been there the entire time (up until the House majority was lost)...

Since no one staked out the role of fiduciary - in the city & county governments, no one in elected office, no one in the bureaucracy, none of the appointees, not the state's contract attorney, not the investment bankers at Regions Morgan Keegan Financial - since everyone abdicated that role to someone else along the chain, who gets to bear the burden?

The citizens of Lewisburg and Claiborne County and Mt. Juliet and whoever else's trusted representatives banked their constituents' money on bond derivatives. That's who.

There is a thoroughly corrupt practice of conducting state business in place and no one thinks that this is anything but "business as usual." "I didn't see that there was anything wrong," claims ex-comptroller Morgan. "Investments lose money," says Morgan Keegan (now that they suddenly have a command of the obvious). Bass Berry and Sims is probably too busy defending Morgan Keegan against ERISA and derivative claims related to alleged shenanigans in its open- and closed-ended bond funds collapse to say much of anything.

You know why the current comptroller put a stop to this and ordered a review, right? Not because his conscience told him to - it was because the New York Times was going to press with this story and it wouldn't look good if he did the same nothing that everyone else has been doing all along. I applaud him for doing it, but damn, how much damage has to happen before someone takes notice?

Everyone effed up here. And since the fault is so widely spread, no one appears to be responsible, therefore no one is accountable. That is the core of the issue.

That's what the "suddenly and conveniently populist" folks like Hobbs miss. They were fine with BS like this so long as everything was kept in the dark and everyone was quietly making a profit off of it. Cities got their money, lawyers got their fees, bankers got their interest, citizens got their services, the candidates got their lobbying money, the parties got their fat cat donations. Everyone's happy, right? Uh huh. Too bad no one was looking anywhere past the end of their nose.

God forbid that anyone consider (gasp!) taxes as a means to raise much-needed municipal funding.

* Like how Governor Sundquist (R) signed this into law, e.g. In the interest of full disclosure, Hobbs might want to tell his dear readers how much money that TNGOP and Republican candidates get from Morgan Keegan; the dewy-doe-eyed innocent in all of this, the George Bailey to the Democrats' Mr. Potter. Whatever.

R. Neal's picture

One problem with the votes

One problem with the votes on that deal is that I believe legislators are allowed to go back and change their vote to the majority as a courtesy. I wonder what the real vote was?

Andy Axel's picture

Tack that one onto the list

Tack that one onto the list re: transparency, accountability, responsibility. "Business as usual." "We've always done it that way." "We're going to extend you the courtesy of being on board with this."

The reason there's any change in tone today is because they got caught, not because they think that they're suddenly doing the right thing.

I'll be interested to know what the findings are out of the comptroller's office. My guess is that they'll wait for this to go gently into that good night.


Dirty deeds done dirt cheap! Special holidays, Sundays and rates!

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