Pension Vocabulary by John Dillon: Ty Fahner Puts Illinois Taxpayers on Hook for $130 Million

6 Aug

In a recent interview, an avuncular Gov. Pat Quinn bemoaned the penalty Illinois will now face as a result of a recent downgrade in bond ratings by Moody’s and Standard and Poor’s. Unaware of the strong armed interference of the Civic Committee of the Commercial Club and its leader Ty Fahner, Quinn mistakenly assumed his usual myopic focus: it must be the pensions

Indeed, the abyss dug by decades of stealing from the public sector pensions and not paying back what was due has generated a nearly $100 billion debt service for the state. On the other hand, Quinn was oblivious of the part the leader of the Civic Committee and his fellows played or boasted they had played in the downgrading of Illinois’ bond rating. “Moody’s downgraded Illinois’ $27 billion of general obligation debt to A3 from A2, with a negative outlook after state lawmakers last week failed to pass a plan to deal with a $100 billion unfunded public pension liability”

The following month, another ripple: Moody’s Investors Service slashed Chicago’s general obligation and sales tax ratings by three notches to A3 from Aa3 due to the city’s large and growing pension liabilities and related budget troubles.

In another recent and bizarre interview, Commercial Club President Tyrone Fahner of the Civic Committee bragged of his organization’s influence and direct involvement in the downgrade of general obligation debt for the state. Always the stern and media-minded patriarch, Fahner described in some detail how the Civic Committee had chastised the members of the bond rating agencies for considering anything but a serious downgrade to affect political and public reaction.

Fahner: “The Civic Committee, not me, but me and some of the people that make up the Civic Committee, some of the same names I mentioned before, did meet with and call, in one case it was in person, a couple of calls to Moody’s, Fitch and Standard & Poor’s, and say, ‘How in the hell can you guys do this? You’re an enabler to let the state continue. You keep threatening more and more and more.’ And I think now we’ve backed off, because we don’t want to be the straw that breaks the back, But if you watch what happened over the last few years, it’s been steadily down. Before that, it’s been the blind eye, and that’s a whole different topic, as you know, about how the rating agencies act and don’t act. That’s more in your field and stuff. It has been irresponsible. We have told them that we thought they were being irresponsible, but we stopped that a couple months ago. I do know that we suggested that they talk to the governor, the governor’s staff to see if he could give them comfort on where the state was going, and I think that’s one of the reasons why we’re really close now. I hope we’re close” .

NOTE: As a result of the downgrades, Illinois will pay an extra $130 million in interest on a bond issue this week due to lowered credit ratings presumably because the state has not been able to solve its pension crisis, but perhaps because of influence by the bully pulpit of the Civic Committee of the Commercial Club of Chicago and its well-heeled corporatist members.

In an email to Rich Miller of Capitol Fax, Fahner now says he misspoke. He describes his comments as “confusing and inarticulate…” He remembers saying that such an action would not have been “the responsible thing for me to do…” so he couldn’t have done it. A look back at the transcript undermines his excuse quite nicely. More…

via Pension Vocabulary by John Dillon: Ty Fahner Puts Illinois Taxpayers on Hook for $130 Million.


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