Get sick, get well
Hang around a ink well
Ring bell, hard to tell
If anything is goin' to sell
-- Bob Dylan

Wednesday, July 24, 2013

Rahm's Civic Committee pals pushed Moody's & S&P to lower IL bond rating

Rahm Emanuel claims that he's been forced to close schools, demolish school budgets and fire thousands of teachers because the city is broke. Why is the city broke? Rahm says it's because of a pension crisis with retired teachers and public employees unwilling to take cuts in their pensions and health care benefits. All this, says the mayor, has led to rating companies lowering Chicago's bond rating, making it even more expensive for the city to borrow money to keep public schools running.

But as Pres. Kennedy once said, "Things do not happen. Things are made to happen."

Now we learn that Moody's and S&P didn't just lower the state's bond rating. They were pressured to do so by Rahm's patrons over at the Civic Committee. In Chicago, the mayor runs the schools. But the mayor doesn't say, "boo" without a nod from the powerful Civic Committee.

How do we know that the Civic Committee made the call to S&P? The Civic Committee's Ty Fahner admits it. This from Capitol Fax:

If you go to about the 47-minute mark, you’ll hear an unidentified questioner say this to Fahner… 
“Maybe sometimes you gotta be irresponsible to be responsible. If a political solution really doesn’t produce a favorable outcome, maybe you really need a market solution. And a market solution, I don’t mean bankruptcy, I mean actually talking down the state rating even further so the state’s bonds essentially become below investment grade. And it drives up the borrowing cost to the state and all of us to a significant level enough that you really feel the public pressure…” 
* Fahner’s response…
“The Civic Committee, not me, but some of the people that make up the Civic Committee… did meet with and call - in one case in person - and a couple of calls to Moody’s and Fitch and Standard & Poors, and say ‘How in the hell can you guys do this? You are an enabler to let the state continue. You keep threatening more and more and more.’
“And I think now we’ve backed off. We don’t want to be the straw that broke the camel’s back… It hasn’t been irresponsible, but we have told them that we thought they were being irresponsible. But we stopped that a couple of months ago.”
h/t Brother Fred & Glen Brown

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