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Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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So at that circus event Harvey taxpayers one way or another will pay for 3 sets of attorneys: – City attorney. – Police pension attorney. – Fire pension attorney. Add the state Comptroller attorney and the attorney for the bond trustee (bank), and 5 sets of attorneys were present at that one court event about the distribution of state funds to Harvey. Hard to create a more inefficient and messed up pension system. But the system was not designed to be efficient or stable. It is an amalgamation of chips used in decades of poker games to get politicians elected… Read more »
Can unpaid creditors force a Chapter 9?
No. No such thing as an involuntary proceeding under Ch.9.
Fioretti, the attorney for Harvey, believes “the bondholders have a statutorily stronger interest” than the pension funds. The city’s position that bondholders have a priority claim on the sales taxes is part of its lawsuit challenging the diversion. This really is the crux of the issue. If pensions are given higher priority than bond holders IL will enter one heck of a death spiral. The only out will be one massive bond issue to fully fund all pensions, but even that will not work unless the actuarial assumption is met. So to make sure it will work, they will have… Read more »
They want a bond to fully fund pensions, so when the state eventually goes bankrupt the pensioners get the full amount and only bondholders get a haircut.
Excellent point Bob, though I wonder what kind of return investors would require to buy such a bond.
Oh yes, absolutely. Pensioners love pension bonds because they essentially swap their unsecured claim for cash.
this is the first article I’ve read about L Madigan getting involved, she did little to steam the tide of corruption in Harvey over the years. when K Raoul gets in there he will be 100% behind pensions first no matter who’s crushed. he’ll be the greatest friend to all the guaranteed pub sector club member gang.
The outcome of this is going to set the precedent going forward, correct? If this doesn’t go to show you how bad this whole situation is, then I’m not sure what will. Oh, well I guess a 1% tax on value of your house will bring all the sheep out and wonder what is going on. Bond holders vs. Pension funds vs. City = Lawyers cleaning house. Congrats to all the lawyers out there getting ready to just make a killing for the foreseeable future while we watch the state crumble around us because of a system on entitlements that… Read more »