Buttigieg releases report on state investments; Calls for explanation

Pete Buttigieg campaign sign.

Press release from the Pete Buttigieg for Indiana State Treasurer campaign:

Buttigieg releases report on state investments; Calls for explanation
State treasurer candidate releases report highlighting risky investment of state funds

(SOUTH BEND, 10/21/2010) – Offering a long-overdue look at the state’s investment portfolio, today Democratic State Treasurer nominee Pete Buttigieg released a straightforward analysis of where and how Hoosiers’ tax dollars are invested.

Buttigieg’s “Report to the People” shines light on the millions of dollars lost in recent years due to overly risky investments in junk bonds, mortgage-backed securities and other toxic assets as well as investments in foreign governments and companies with questionable track records.

“While a great deal of attention has been paid to the treasurer’s lawsuit to shut down Chrysler, that’s only part of a much larger story,” said Buttigieg, a South Bend businessman and Rhodes Scholar. “This office is charged with investing the people’s money and, under the current leadership, there are a lot of questions to be answered.”

Buttigieg’s report focuses on funds managed by the Office of State Treasurer including the money obtained from the 75-year lease of the Indiana Toll Road, the State Police Pension Fund and the state’s general fund.

“Our analysis has identified several areas of concern in the management of state funds,” Buttigieg added. “While few pension and trust funds have posted stellar returns in these difficult economic times, it appears that Indiana is particularly exposed to unusual kinds of risk. It also appears that we are missing an opportunity to keep our state’s funds deposited close to home, and that our values are not always reflected in the kinds of securities held in our name.”

Among the report’s key findings were high concentrations of junk bonds and mortgage-backed securities in the state’s infrastructure funds, ownership stakes in companies like Phillip Morris, Halliburton and Transocean and, most shocking, more of the state’s public deposits going to banks in Ohio rather than in Indiana.

“Hoosiers have been kept in the dark when it comes to the details of where their money is and how it’s performing,” added Buttigieg. “Most of this information is either outdated or only attainable by time consuming and expensive information requests. This lack of transparency has undercut accountability and is part of the reason our money found its way into so many precarious positions.”

“I think Treasurer Mourdock needs to take break from national Tea Party politics, and explain and who is minding the store,” added Buttigieg. “I’ve asked him to debate, but he continues to make excuses, and I think we now know why. He’s unable and unwilling to defend the decisions he’s made as state treasurer, just as he cannot explain accepting campaign cash from bailed-out banks.”

Throughout the campaign Buttigieg has offered specific proposals for better investing state dollars to create jobs and has championed greater transparency in the office with a number of measures he would enact if elected.

“As state treasurer, not only will I move our money into safer investments, I’ll release reports to the public on a regular basis so all Hoosiers know exactly how their money is performing,” added Buttigieg. “The more we, the people, know about what is happening with our money, the more accountable our government is for making the right decisions.”

“If elected, I look forward to the opportunity to show, rather than tell, how Indiana can have a stronger, safer, more accountable financial future.

A resident of South Bend, Buttigieg (pronounced “Boota-judge”) graduated from Harvard and studied economics at Oxford as a Rhodes Scholar. Prior to leaving his job to become a full-time candidate, he worked in the private sector at a top consulting firm where he specialized in economic development, retail strategy, energy and logistics.

For more information on Pete Buttigieg or his campaign for Indiana State Treasurer please visit www.peteforindiana.com or call 574-889-0002.


Summary of findings:

Major Moves and Next Generation Trust Funds

  • At least $266 million worth of non-investment grade assets (a.k.a “speculative” or “junk bonds”)
  • Investment returns short of expectations and target values
  • Highly unusual negative net return on Next Generation Trust Fund in 2009, possibly due to junk bond losses
  • Relatively high concentration of risk (12.5 percent) in mortgage-related investments issued by Fannie Mae and Freddie Mac
  • Presence of mortgage-backed securities with no government backing; value difficult to assess

State Police Pension Fund

  • Net loss of $28.4 million in last 3 years
  • Millions of dollars in mortgage backed securities and collateralized mortgage obligations (CMOs) issued by banks including Citi, Credit Suisse, Capital One, Wachovia, Goldman Sachs, AIG and the failed banks Countrywide and Lehman Brothers
  • Equity positions in companies with questionable records like Halliburton, News Corp, and Transocean

Public Depositories

  • Of Indiana’s $950 million in state deposits, approximately $640 million now placed out-of-state banks
  • More than $85 million on deposit with non-Indiana banks misleadingly classified as based in Indiana
  • Not one of the top five banks receiving the state’s public depositories headquartered in Indiana
  • Ohio, not Indiana, as top recipient of Indiana deposits at $369 million

Click here for a complete copy of the “Report to the People.” Click here for a list of the stocks, bonds and other postions the state owns.


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