SBA Goes With Familiar Company for Review

The state Board of Administration, which oversees Florida's investments, chose BlackRock to help it figure out what to do about the run on its troubled state-run investment pool. BlackRock is hardly new to managing Floridians' money -- the firm receives major fees to both advise and invest Florida's prepaid college tuition fund.

The state on Friday hired the publicly-traded investment firm to come up with an independent financial review of the Local Government Investment Pool and will work through the weekend with SBA staff members, according the governor's office. The news release didn't say how much BlackRock will get paid for its services.

Comments

Let us pay you to lose money and then we'll pay you to advise us out of the mess that you got us into

[guest120]

And we pay an elected CFO and her chief of staff, both experienced bankers, over a quarter of a million dollars in state salary annually for what exactly? To hire outside consultants?
When the CFO was running for office she touted her skills:

"Florida needs to be someone with strong financial experience to manage the business of our state.

With a twenty-five year financial career, including service as President of Florida's largest bank, I am uniquely qualified to serve as Florida's next Chief Financial Officer.

In my role as Chief Financial Officer, I am going to ensure that taxpayer money is spent wisely and well."

These are scary times in FL.

Wasn't it Sink's comments that caused the panic in the first place?

The SBA lost nearly 14 billion dollars in a 27 billion dollar fund folks. That is not chicken feed.

Apparently, a lot of local government money (school boards, cities, counties) is being pulled out due to fear of more losses.

What were the losses? Outside of money being pulled. Sink did say she was having a review done in light of the mortgage markets, but the reports said no sub-prime investments...

Sink's reports said the impact on the treasury was minimal. That's a completely different fund.

11:37, we also pay the Governor and the Attorney General to watch over this fund, but I don't hear you mentioning their names.

7:52, your type of ignorance is exactly the problem. The SBA didn't "lose" a dime. Local Governments pulled their money (about $10 billion of the $24 billion fund) out of the fund - it isn't lost. Every investor still got at least $1 for every $1 invested and most got more than that. Evry dime left in is still there and, unless the SBA is forced to sell assets at a loss due to scared investors, no one will lose a dime.

Sink certainly had a hand in causing the scare, but it is good that she pushed for a brief cooling off period like the stock markets do.

[Susan S]

A perfect example of why Social Security shouldn't be privatized. If the GOP has any control of money, they will unwisely invest it with their cronies and you will be scr*wed.

Nice try at blaming Sink.

From yesterday's Palm Beach Post:

"The government investment pool is a place for governments to put money for a few weeks, months or years...

The pool is a sort of supercharged money market fund where governments park money that they intend to use for various reasons, including operating expenses such as payroll. Most money market funds put sizable chunks of their deposits into Treasury bills, Treasury notes, federal government agency notes and certificates of deposit.

But the state investment pool had almost none of its portfolio in those super-safe investments. Instead, most of its money is in so-called corporate and commercial paper.

That commercial paper included securities backed by mortgages, and those kinds of mortgage-backed securities have lost value amid the housing market's slowdown."

Here's the link:
http://www.palmbeachpost.com/business/content/business/epaper/2007/11/30/a21a_sbapoolside_1130.html

12:34

You are right in saying that the SBA did not lose over $10 billion; however, they are reportedly holding nearly $2 billion in investments backed by mortgages that they cannot sell at face value even though they are valued that way within the fund. As such, the ones that "got out" received $1 for $1, but the last ones in the fund could get ROYALLY screwed.

[Ernest1]

Not solely blaming Alex Sink, but she is the CFO. Now we have external advisors coming in to help us out of this mess. Maybe the BlackRock experts will really like Florida---it's apparent we need them--and one of them can run to be the CFO in 2011.