Alex Sink’s attempt to rebut campaign allegations by Republican gubernatorial opponent Rick Scott that she fiddled while Florida’s investment portfolio burned was bolstered by an unlikely ally Tuesday: Florida Attorney General and former Scott foe Bill McCollum.
Days after Scott unleashed allegations that Sink was at fault for an investment freefall, Scott’s former Republican rival McCollum appeared to go out of his way Tuesday to steer the state’s top investment official to provide cover for the State Board of Administration’s (SBA) investment oversight during the tumultuous years following the 2007 market crash.
In a series of questions, McCollum led SBA executive director Ash Williams down a path of questioning that sought to refute recent newspaper reports and a $1 million Scott ad campaign that paper losses in the state’s retirement and local investment funds were preventable and resulted in actual losses to retirees and local governments.
Williams obliged, and reiterated what the SBA has said all along – that the losses are so far only on paper because the state hasn’t generally sold securities at a loss.
“The SBA is stronger and different than it was only two years ago,” Williams told McCollum, Sink, and Gov. Charlie Crist, who make up the SBA governing board, which collectively oversees the state’s investment portfolio, which this week totaled more than $140 billion.
The SBA and the pension have been in the news in recent weeks with a newspaper story detailing an internal push to buy risky investments a couple years ago in the lead up to the run on the Local Government Investment Pool, and a federal commission also asking about that 2007 run. The LGIP is like a money-market account in which local governments can park cash for investing, but have access to it when they need it. When some securities the fund bought at the end of 2007 were downgraded to junk status, local governments withdrew cash furiously in what essentially was a run on the bank.
Meanwhile, the U.S. Financial Crisis Inquiry Commission, set up to examine the causes of the 2008 economic crash, has asked the SBA for documents related to the crisis.
On Tuesday, Williams said 80 percent of the local investment pool’s original value has been returned to investors. Of the remaining 20 percent, the SBA is still receiving cash back from the “vast majority” of investments totaling $5 million to $15 million a month.
“The truth is they are performing,” McCollum said. “They are assets that pay back.”
The St. Petersburg Times reported that if sold off today, the high risk pool would lose $300 million. Williams said the figure is largely meaningless because the state has no intention of selling the securities for losses.
“Why would you fixate on a particular value at a particular point in time?” Williams said. “If you don’t have to sell you don’t have to sell. That is a position of strength and it’s one of the great assets we have in the pension fund.”
The pension fund has been a target of Republican gubernatorial candidate Rick Scott, who accuses Sink of sitting idle as the state’s pension fund lost $24 billion in recent years. Sink acknowledged investments in the $116 billion fund dwindled beginning in 2007 as the recession hardened. But the pension fund generally bounced back – increasing by 8.4 percent for the year ending August 31.
The Florida Republican Party is spending at least $1 million on the ad, which has been running more than a week. It directly pins the pension losses on Sink, but fails to mention that Crist and McCollum are also on the SBA board.
On Tuesday, Sink bashed the ad, calling it “unconscionable” and “inappropriate.” Echoing other SBA officials, Sink said numerous private rating agencies have repeatedly lauded Florida’s retirement fund as one of the nation’s soundest.
“What makes me really angry is that he’s playing these ads trying to scare our retirees, scare our seniors, that there’s something wrong with Florida’s pension fund, and there’s nothing wrong with it,” Sink said.
By Michael Peltier
The News Service of Florida
