Fontana hopes Senate bill brings bailout
President-elect Barack Obama promises hope and change.
The city hopes he can spare some change.
Since it lost $10 million in bonds when Lehman Brothers. Inc. declared bankruptcy in September, the city has joined with 30 municipalities, counties and special districts in the state to lobby for a cut of the $350 billion in bailout bucks that remain from the $700 billion Emergency Economic Stabilization Act of 2008, passed last year by Congress.
"We're looking to find whatever help we can get from the federal government," said Lisa Strong, deputy treasurer and management services director. "It's the first time we've combated losses of this type."
The city carries a $250<TH>million investment portfolio spread
across about 100 funds, from which it taps money to put into the
General Fund, redevelopment and an array of services.
The city invests in a variety of funds to avoid taking a big hit, which some cities with smaller budgets did when Lehman Bros. collapsed, Strong said.
Financial wisdom built on knowledge and experience did take a big hit when the investment bank fell.
Cities are allowed to invest up to 30<TH>percent of their portfolios in corporate bonds, as long as the entity carries an "A" rating, which Lehman had before it flopped.
"I just couldn't believe it," Strong said. "It was rated 'A' on Friday and was bankrupt Monday. I was in shock."
Fortunately, Strong said, cities are allowed to invest up to only 15<TH>percent in any one corporate name.
Strong is working with an official in San Mateo County to prod state and federal officials to bail out local budgets battered by investments gone bust.
Mary McMillan, deputy county manager for San Mateo County, said Thursday hers is "a statewide group of cities that were all thrown under the bus" when Lehman Bros. drowned with the economy.
Already, they've contacted members of Obama's transition team, seeking support for the bailout.
Her county lost about $155 million in a pool of money collected from various cities and invested into Lehman Bros.
McMillan said many municipalities in the state with whom she's been in contact have declined to join her efforts out of embarrassment over their losses.
"We lost school money, we lost transit money," McMillan said. "It was ugly. There were a lot of unhappy people here."
At a meeting in mid-December, McMillan and a handful of city officials from her county urged Sen. Dianne Feinstein, D-Calif., to bring some of the bailout money back to the state.
On Tuesday, Feinstein introduced Senate Bill S116, which would require Treasury Secretary Henry Paulson to send $10 billion to local governments throughout the country that suffered significant losses from failed highly rated investment institutions.
The bill comes on the heels of Paulson ignoring written requests from Feinstein, Sen. Barbara Boxer, also D-Calif., and numerous state and local officials seeking help to recoup almost $300 million lost in such investments.
Strong on Thursday didn't expect to get all of her city's investment back.
"We've been told we may get back between 40 and 60 cents on the dollar," Strong said. "Or we may get zero. You can't trust what you don't know."
Strong said the city set aside $850,000 for the General Fund to help offset losses from the Lehman Bros. debacle as officials wait to see if a bailout will come through.
In the meantime, the city holds $10 million each in corporate bonds from HSBC Bank, New York Life Insurance Company. and Protective Life Corp., Strong said.
"To pull the money out now, (the city) would take huge losses," Strong said. "As soon as I can get out of them without taking a larger loss, I will."
josh.dulaney@inlandnewspapers.com
The city invests in a variety of funds to avoid taking a big hit, which some cities with smaller budgets did when Lehman Bros. collapsed, Strong said.
Financial wisdom built on knowledge and experience did take a big hit when the investment bank fell.
Cities are allowed to invest up to 30<TH>percent of their portfolios in corporate bonds, as long as the entity carries an "A" rating, which Lehman had before it flopped.
"I just couldn't believe it," Strong said. "It was rated 'A' on Friday and was bankrupt Monday. I was in shock."
Fortunately, Strong said, cities are allowed to invest up to only 15<TH>percent in any one corporate name.
Strong is working with an official in San Mateo County to prod state and federal officials to bail out local budgets battered by investments gone bust.
Mary McMillan, deputy county manager for San Mateo County, said Thursday hers is "a statewide group of cities that were all thrown under the bus" when Lehman Bros. drowned with the economy.
Already, they've contacted members of Obama's transition team, seeking support for the bailout.
Her county lost about $155 million in a pool of money collected from various cities and invested into Lehman Bros.
McMillan said many municipalities in the state with whom she's been in contact have declined to join her efforts out of embarrassment over their losses.
"We lost school money, we lost transit money," McMillan said. "It was ugly. There were a lot of unhappy people here."
At a meeting in mid-December, McMillan and a handful of city officials from her county urged Sen. Dianne Feinstein, D-Calif., to bring some of the bailout money back to the state.
On Tuesday, Feinstein introduced Senate Bill S116, which would require Treasury Secretary Henry Paulson to send $10 billion to local governments throughout the country that suffered significant losses from failed highly rated investment institutions.
The bill comes on the heels of Paulson ignoring written requests from Feinstein, Sen. Barbara Boxer, also D-Calif., and numerous state and local officials seeking help to recoup almost $300 million lost in such investments.
Strong on Thursday didn't expect to get all of her city's investment back.
"We've been told we may get back between 40 and 60 cents on the dollar," Strong said. "Or we may get zero. You can't trust what you don't know."
Strong said the city set aside $850,000 for the General Fund to help offset losses from the Lehman Bros. debacle as officials wait to see if a bailout will come through.
In the meantime, the city holds $10 million each in corporate bonds from HSBC Bank, New York Life Insurance Company. and Protective Life Corp., Strong said.
"To pull the money out now, (the city) would take huge losses," Strong said. "As soon as I can get out of them without taking a larger loss, I will."
josh.dulaney@inlandnewspapers.com
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