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It’s a “no-brainer.” It doesn’t even amount to borrowing money. Incredibly, that’s what the new chairman of the powerful Chicago City Council Finance Committee, Patrick O’Connor, says about borrowing to pay off Chicago’s pension debt.

It’s in an interview of O’Connor by the Chicago Sun-Times’ Fran Spielman.

Maybe Chicago’s new mayor will have a different opinion, but O’Connor’s comments are a pretty clear indication Chicago is headed towards a pension obligation bond.

We have a different opinion on pension obligation bonds and we are not alone. Some of our earlier articles on them are linked below.

Mark Glennon is executive editor of Wirepoints.

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Herb Caplan

Without a Constitutional amendment to permit the needed reforms in pension obligations, both Chicago and the state propose to treat the unfunded public employee pension debt as an interest only mortgage. The actual debt is never paid, never amortized over time, it is always increased in total amount and extended, and only the ever increasing debt management cost becomes a budget item until even that can no longer be paid. The bond sales will make lots of money for everyone but the taxpayers and their indebted future generations. The authors of this pathway to hara kari bankruptcy will be long… Read more »

Bob H

I think the last vote for a constitutional amendment was over ruled by the State Supreme Court. Ann Burke? as long as the Democrat control everything only their wishes will be considered

Gemini

“It doesn’t even amount to borrowing money.” Yeah right.

It’s like taking an advance on your Home Equity Loan to pay off your credit cards.

What a moron.

J.A. Herzrent

Give the bonds to pensioners while they are valued at par. Then they can cash in the bonds over the next few years to buy their groceries. OR let pensioners choose whether they want to be pensioners with contract rights or bondholders when bankruptcy is filed. Meanwhile, those who pay real money to buy the bonds (as well as pensioners) can rest assured that underwriters, several sets of bond counsel, a consultant or two will be paid up front and a couple years of interest will be “capitalized” so default is not immediate. Why not prepay some actuarial fees and… Read more »