Wednesday, June 17, 2015

Rhode Island Governor and Treasurer Mislead Municipal Bond Markets

                               Governor Raimondo and Treasurer Magaziner have  joined  Providence in misleading municipal bond markets and rating agencies as to the true financial condition of the State Capitol.
The state is a cesspool of insiders.

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I live in Rhode Island a state where the elected leaders consider it moral to unilaterally alter the terms of employee benefits and also consider it moral to obligate state taxpayers to pay off a debt that is legally not theirs ,the $100 million in insured bonds of the EDC for 38 Studios were paid so that assembly members and insiders are not investigated by the insurance company. This is massive public corruption. Had the assembly or Governor or Attorney General actually instituted an investigation ,as they all promised, anytime in the last 18 months they could make a case that they were pursuing the truth, but the fact is that the purpose of these payments is to protect insiders.This budget included yet another appropriation for 38 studios payment by taxpayers. It wasn't highlighted by the Governor and it wasn't even mentioned by the Speaker. They consider this a closed subject. Now their brethren and fellow insiders in Providence have been found to have been stealing money from the police and fire pension fund. Again the speaker and the Governor are silent because they know Providence can't pay back the fund the money they stole ,in this case $62 million plus interest. To illustrate how desperate Providence has been to hide cash flow problems and mislead Municipal bondholders they have been crediting 8.5% interest to the pension fund for this unauthorized loan. They are ,with good reason , afraid to open their books to outsiders. There can be no rational explanation for this misappropriation of $62 million , secret borrowing at 8.5% and accounting that has recently been ruled inappropriate. This has been going on for ten years at least. Who knows what else is going on and what is being covered up?
In just two weeks Providence will default of a loan (short term IOU) , to the pension fund in the amount of $62 million dollars. This technical default should bring in ratings agencies and the Feds but Providence and the Elorza administration will try to do exactly as the Taveras Administration before and double talk and mislead the municipal bond market as to the true financial condition of the pension plan and the city. the regulators can then watch them mislead municipal bondholders in "real time". I will be issuing a 40 page report to the media and regulators on June 29 for everyone's review. Not everyone in city hall is or has been misleading but many are guilty and they need to come clean. 

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