thays a articull in todays new york times on the one-company gang known as Morgan Keegan:

LEWISBURG, Tenn. — Five years ago, this small factory town was struggling to pay the interest on a bond for new sewers. Bob Phillips, Lewisburg’s part-time mayor and full-time pharmacist, was urged by the town’s financial adviser, an investment bank named Morgan Keegan & Company, to engage in a complex financial transaction to lower interest rates.

When a Lewisburg official attended a state-sponsored seminar intended to lay out the transaction’s benefits and risks, he was taught by investment bankers from Morgan Keegan.

And when Lewisburg decided to go ahead with the transaction, who was there to make the deal? Morgan Keegan.

In January, local officials were shocked to discover that annual interest payments on the bond had quadrupled to $1 million. Morgan Keegan, they said, did not serve them well in any of its roles.

tiz a panefull read ...

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R. Neal's picture

A painful read

A painful read indeed.

"People with Morgan Keegan told me, 'Don’t worry if you don’t understand it.'"

That's the story of our present economy in a nutshell.

Wonder how many bigger cities are affected? Sounds like a pretty widespread problem in Tennessee.

Pam Strickland's picture

state reporting

I hopped on here to post this same link. What really struck me -- other than the sheer scariness of the story -- is that no media outlet in Tennessee has bothered to report on this. I was already thinking that when I got to the part that said there was a legislative hearing on the matter in the last couple of weeks. All we've been hearing about is Stacy Campfield's nonsense and gun permits and laws against baggy pants. I've been wondering what on earth the legislature does in this state. I had to read it in the NYTimes.

That's sad.

Just sayin'.

Pam Strickland

"We are what we pretend to be, so we must be careful about what we pretend to be." ~Kurt Vonnegut

bizgrrl's picture

After The New York Times

After The New York Times made inquiries, the Tennessee comptroller, Justin P. Wilson, ordered a statewide freeze on bond derivatives and a review of the seminar taught by Morgan Keegan and others.

The State of Tennessee had to have contact from The NYT to know there was a problem. Geez!

Municipal bond experts say they know of no other state where a firm was allowed to wear three hats; several states prohibit a single firm from acting as both adviser and underwriter.

Sheesh!

Ragsdale2010's picture

Guess how much MorganKeegan made in fees?

Wads of money and these were essentially ginned up projects by Morgan Keegan. Look at their lawyers and their accounting firms which also carried off rather hefty fees from these types of transactions.

Knoxville is loaded with businesses which do nothing but gin up bond deals and projects and refinancings to create fees and work where none really exist and none are really needed. We continually hold these businesses up and leaders in the community, but in reality, its a make work mentality, that feasts of taxpayer dollars, they're just hidden very well behind some well spun project or initiative.

Maybe when the convention center collapses in its own debt, we'll realize the do gooders are really no gooders and shut down the TIFs, TEFs, in lieu ofs, and all the other crap.

rikki's picture

I keep thinking about

I keep thinking about Scoobie Moore going on that financial seminar/golf vacation. What easy pickings our insular, donor-controlled politics offers firms like Morgan Keegan.

Nashville had a city council member with bond experience trying to steer them away from risky financing for their stadium, but she was overruled, so even when a public body has adequate experience at its disposal, the shysters can still grease enough palms and lard enough bellies to close the deal.

Rigsby Werner's picture

I'm surprised Justin Wilson was in the office when Times called

Wilson was a Sundquist crony from previous administrations and in my opinion, the Sundquist administration was a poster child for people in office who did not have the skills/background/understanding of the areas they were responsible for. Sundquist gave us the illegal immigrants who got Tennessee drivers licenses although they were not here legally and created a haven for individuals across the country to get P.O. Boxes or mail drops in Tennessee and get free medical care on the TennCare program.

Saddest thing is Morgan Keegan and Bass Berry and Simms are homegrown Tennessee businesses which ought not be putting their communities in these risky ventures, but anything for a buck these days, regardless of whether or not the community benefits, as long as the broker/underwriter/lawyers get a fee, they live to fight another day.

Mello's picture

Cumberland connection?

I do not begin to understand this stuff but I was confused with the reference to Ayres. The following video link takes you to the Blount County Commission's talk of this in Feb 2009. Just open the menu to FEB 2009 Commission ( not Work Session) then go up to the 1:13 time stamp.

(link...)

Some folks will understand this very long exchange between Commissioner Wendy Pitt Reeves, Joe Ayres and Blount County ViceMayor/Director of Budgets Dave Bennett.

EVie's picture

Can someone tell me who the

Can someone tell me who the woman is asking all the questions?

Mello's picture

that would be

Blount County Commissioner Wendy Pitts Reeves if you are asking about the bond questions.

Ron McHerron's picture

The members of the Tennessee

The members of the Tennessee General Assembly are notorious for looking out for their big business buddies. Todays New York Times gave us a particularly messy example.

In 1999, the General Assembly passed HB1530/SB1543, which allowed municipalities to purchase bond derivatives. It also allowed MorganKeegan to educate local governments about these bonds at the same time that the bank underwrites them.

Now the interests rates on these bonds have skyrocketed, and local governments are in big trouble across the state.

Three legislators now running for governor voted in favor of these bills. Kim McMillan on May 19, 1999. Roy Herron and Ron Ramsey on May 27, 1999.

Makes you wonder what these three would do to our state.

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