Risk won; Fla taxpayers lost
Three years ago, the state of Florida made bad investments that lost hundreds of millions in value. State leaders blamed the sharks of Wall Street, who they said duped Florida money managers into buying way-too-risky securities.
Chief Financial Officer Alex Sink pushed the state to sue big banks, which she said dumped tainted investments on Florida. Gov. Charlie Crist demanded a no-holds-barred investigation and named four Wall Street firms that he suspected took advantage of the state. Attorney General Bill McCollum wondered if there had been fraud and promised help with an investigation.
But no bank was prosecuted, no lawsuit was filed and there was never a full accounting of a financial debacle that could cost Florida governments and taxpayers hundreds of millions of dollars.
Now the St. Petersburg Times has obtained e-mails and internal memos that document a story at odds with the one told by Crist, Sink and McCollum, the elected officials responsible for oversight of the state's money managers.The securities Wall Street "dumped" on Florida? The records show the state was anything but an innocent dupe; it was an eager partner. Going back at least seven years, state money managers had been trying to find a way around rules that restricted them from buying certain risky securities. Time and again they asked, time and again lawyers told them no.
But so eager were Florida's money managers for higher yields, they bought them anyway.