Sports Authority Payment to Wall Street Would Buy a Lot of Season Tickets
Republican Senate Budget Officer Leonard Lance called on fellow members of the Senate Budget and Appropriations Committee to unite in requesting hearings on reckless borrowing practices that have caused millions of dollars in losses for state taxpayers.
Lance made this plea after learning that the New Jersey Sports and Exposition Authority will pay $37.5 million plus interest to cancel a lending agreement that was supposed to save taxpayer money, not funnel windfall profits to Wall Street bankers.
“The Sports Authority will pay Wall Street enough to buy season tickets for thousands of Jets and Giants fans, all because it took totally unnecessary risks with borrowings,” Lance said.
Incredibly, the actual cost of the payout will be millions of dollars higher than the $37.5 million fee paid to cancel the so-called “swap” agreement because the Authority borrowed the money for the payment and will pay interest on that debt. Lance called on the Authority to release a complete account of how much the state expected to save using this type of complex financial transaction and a final accounting of how much the state saved or lost.
“As shocking as this payment was, it’s nowhere near the highest that state authorities have made to Wall Street to get out of similar agreements. In 2005, the state paid $123 million to get out of a single ill-advised swap. This year, the state has struggled to get out of billions of dollars of such swaps agreements, most entered into finance a school construction program already under fire for its waste and inept operations. It’s irresponsible for the state not to provide taxpayers a complete, easily available and honest accounting of what these borrowings may have drained from state finances.
“The state and its authorities have tried to keep the spotlight from being turned on borrowing practices. Members of the press have struggled to get details of these complex and secretive arrangements, only to be stonewalled or given contradictory answers to questions that public officials should be able to answer without hesitation when billions of dollars are at stake.
“It’s long past time for an accounting. I’m asking my fellow members of the Senate Budget Committee to request that the Treasurer’s office and every state authority and agency provide complete details on these agreements, including all terms of these agreements; every fee paid to lawyers, advisers and bankers; a complete list of campaign contributions made by anyone involved with the negotiation or approval of such agreements, and a complete account of what, if anything, the state has done to recover losses from the banks and financial professionals who advised our authorities and Treasury Department to enter into these agreement.
“Legislators of both parties, in both houses voted to put my constitutional amendment before the voters that will ban authorities from borrowing without voter approval. In the future, voters will need to know not just how much or for what the state is borrowing, but how the money is being borrowed. They’ll demand that every borrowing is done at the lowest possible cost and risk to taxpayers. These hearings are vital to making absolutely sure that this occurs, as well as clear away the veil of secrecy that has protected state officials, bankers and financial advisers from being held accountable by taxpayers for their actions.”
Link to Post:
Similar Posts:
- Lance and Oroho: Release Estimates of Debt Costs Now
April 14, 2008 - Pennacchio Asks Corzine for Explanation of Lehman Investment
October 2, 2008 - Extra $1 Billion Demonstrates Why Voters Need to Approve All Borrowing
March 10, 2008 - Bucco: Corzine’s Weak Leadership on Transportation Costing State Dearly
November 12, 2008 - Pennacchio: Lehman Brothers Execs May Get Bonuses Before New Jersey Workers Get Answers
October 29, 2008
