Monday, August 5, 2013

“I don’t know why there’s not more outrage…” regarding Tyrone Fahner’s remarks at the Union League Club

Unidentified Questioner [Note: eight previous questioners had identified themselves]: Maybe sometimes you’ve got to be irresponsible to be responsible, and if a political solution really doesn’t produce a favorable outcome, maybe you really need a market solution, and a market solution, I don’t mean bankruptcy, I mean, actually talking down the state rating even further, so the state’s bonds essentially become below investment grade, and it drives up the borrowing costs for the states, and all of us to a significant level enough that you really feel the public pressure. I mean, that’s somewhat irresponsible, but in the end, the rating agencies that can lower sovereign debt, you can see Europe going through the same scramble, is that there has to be a market pressure that is overwhelming. The market pressure is that our bonds, here they’re the 50th rated out of 50 states, but still haven’t gone lower to where they’re actually below investment grade.
Fahner: The Civic Committee, not me, but me and some of the people that make up the Civic Committee, some of the same names I mentioned before, did meet with and call, in one case it was in person, a couple of calls to Moody’s, Fitch and Standard & Poor’s, and say, 'How in the hell can you guys do this? You’re an enabler to let the state continue. You keep threatening more and more and more.' And I think now we’ve backed off, because we don’t want to be the straw that breaks the back, But if you watch what happened over the last few years, it’s been steadily down. Before that, it’s been the blind eye, and that’s a whole different topic, as you know, about how the rating agencies act and don’t act. That’s more in your field and stuff. It has been irresponsible. We have told them that we thought they were being irresponsible, but we stopped that a couple months ago. I do know that we suggested that they talk to the governor, the governor’s staff to see if he could give them comfort on where the state was going, and I think that’s one of the reasons why we’re really close now. I hope we’re close.

AFSCME and AFL-CIO Spokesmen on Fahner’s Remarks about Influencing the State of Illinois’ Credit Rating:

“…Anders Lindall, spokesman for AFSCME Council 31, called Fahner’s on-camera remarks ‘outrageous,’ adding that Illinois taxpayers should be ‘outraged and demand answers.’  

 “‘Here is a group of some of the richest and most powerful corporate CEOs in the state of Illinois who claim to be civic minded and have the best interests of the state at heart, but the president of their lobbying group is bragging about their actions behind the scenes to influence the ratings agencies and drive down the state’s credit rating [and] thereby drive up the costs to taxpayers,’ Lindall said…

“The government has an ‘obligation to shine some light’ on the Civic Committee’s apparent lobbying of the three main credit rating agencies to ensure no illegal activity occurred and that ‘these corporate giants didn’t profit in some way by this back-room phone calling,’ said Bill Looby, a spokesman with Illinois AFL-CIO.

“‘This is wrong on a lot of different levels,’ Looby continued. ‘If it’s not illegal, it should be. And we should find out what happened, and who did it, and how it was accomplished, and whether or not there was anyone that benefited from it.’

“Overall, Lindall says it is ‘repulsive’ to see Fahner furthering the Civic Committee’s ‘misinformation campaign’ to portray the modest and well-deserved $32,000 average pension of a retired employee as ‘what’s wrong with state government.’

“‘It goes much further when it appears that, by their own admission, these tremendously powerful CEOs and lobbyists are working behind closed doors to manipulate the creditworthiness, and therefore the cost to taxpayers of the state and the people of Illinois,’ he said…

“Lindall said the public deserves to know whether any of the executives who talked to the credit ratings agencies were from any financial institutions that serve as bond underwriters for the state, the city of Chicago or other public entities in Illinois that have seen their ratings downgraded.

“‘Do these underwriters see higher profits in the form of increased fees or any other type of higher profit when the bond rating is decreased,’ Lindall asked. ‘Do the banks’ profits go up when the state bond rating goes down?’

“…In his remarks, Fahner, also a former Illinois attorney general, added that members urged the credit ratings agencies to contact the governor, which Lindall said raises even more questions, including what knowledge the governor’s office had about their lobbying efforts.

“Additionally, Fahner is the previous chairman and a current partner at the Chicago-based Mayer Brown law firm, which is the state’s bond and disclosure counsel. Mayer Brown won a two-year contract with the state in September 2011. The state of Illinois pays the firm to serve as its attorney when it goes to the credit markets to offer bonds, Lindall explained.

“‘Can that firm be carrying out its duties under the law and before the bar to serve its client, the people of the state of Illinois, when a partner in that firm admits to going behind closed doors to act in opposition to the best interests of the people,’ Lindall asked.

“So far, the unions say they have received no indication of any investigation that has been launched in light of Fahner’s remarks. State lawmakers and other elected officials have also been mum on the matter.

“‘I don’t know why there’s not more outrage within the elected official ranks,’ Looby stressed.”

From an e-mail Rich Miller at Capitol Fax received from Civic Committee President Ty Fahner:

“Regarding my comments at the Union League Club in March, I misspoke. First, while I may have said so, I didn’t call the ratings agencies, nor did any of our Civic Committee staff. My response to the questions was very confusing and inarticulate. If you notice, at the end of my answer, I close by saying it wouldn’t be the responsible thing for me to have done so with our members being the state’s largest employers. But I did say it.”

[This reminds me of Richard Nixon’s “I have nothing to hide. The White House has nothing to hide.” Substitute White House for Civic Committee].

“As a result of the downgrades, Illinois will pay an extra $130 million in interest on a bond issue this week due to lowered credit ratings presumably because the state has not been able to solve its pension crisis, but perhaps because of influence by the bully pulpit of the Civic Committee of the Commercial Club of Chicago and its well-heeled corporatist members” (John Dillon).

1 comment:

  1. This was an excellent yet painful to read post. Thank YOU Mr. Brown for shinning a light on Fahner and his Fat Cat Civic Committee. It is class warfare Mr. Brown....class warfare....