UNO charter hustlers have Wall Streeters' undies in a twist

The scandal involving the UNO charter school hustlers has Wall Street investors worrying. Today's Sun-Times reports: 

Now under investigation by two state agencies, the United Neighborhood Organization is also facing tough questions on Wall Street from investors who lent tens of millions of dollars to help pay for the rapid expansion of UNO’s charter-school network. The questions were prompted by Chicago Sun-Times reports on $8.5 million in state grant funds paid to companies owned by two brothers of Miguel d’Escoto, a top UNO executive.

As the largest charter-school operator in Illinois, the United Neighborhood Organization depends largely on City Hall and Springfield. It also borrows money — from banks and on Wall Street — to pay its bills.


Steven Levy, an executive with Prudential Financial in Newark, N.J., has been all over UNO boss Juan Rangel about the d’Escoto brothers’ deals. Levy says he's worried about the teachers union being able to exploit UNO corruption to kill millions in state grant money to pay for the group's real estate deals. Investors are losing confidence in the group's ability to pay back millions in loans.

“From what I understand, they are able to pay debt service — certainly in the near term, in the next year or two,” says Carlotta Mills of Standard & Poors. “Right now, I want to see if they are able to get the money from the state.”

Machine pols like Ald. Eddie Burke and Mayor Emanuel are putting the screws on Gov. Quinn in order to get him to turn the money spigot back on again to keep the Wall Streeters happy.

I'm pretty sure he will. When Wall St. speaks, Chicago politicians listen.

Standard & Poor's -- No standards but a lot of folks made poor

Forget for a brief moment that the current Illinois teacher-pension crisis is a manufactured one, caused primarily by the state's inability or unwillingness to raise enough revenue to make it's necessary contribution to the pension fund. Forget also for a brief moment, that the state legislature grabbed millions from that fund, into which retirees had been paying out of their take-home pay for decades and used that money to pay off other debts.

Let's look for a moment instead at how the threat by Gov. Quinn, and other Dems,of a reduced state credit rating by Standard & Poor's, was used to try and steamroll the legislature into passing SB1. That bill would have dropped an unconstitutional bomb on the cost-of-living adjustments and the health care contributions being made by the state to aged, sick and poorest retirees.

S&P, which is owned by McGraw-Hill Publishers (one of the nation's largest testing and textbook companies) went along with the pension-crisis narrative and announced on January 24th that IL's credit rating has been downgraded again making it the nation's lowest.

ABC reported,

"Standard & Poors analysts said even if Illinois is able to pass pension legislation soon, the state is likely to face a legal challenge, so it could be years before the budget situation or the unfunded liability improve. That, along with an income tax increase that's scheduled to expire on Jan. 1, 2015, contribute to the state's negative economic outlook."

And you can count on those S&P analysts to make an honest assessment of a state's credit worthiness. Right? Well let's have a look and see.

Today, the Justice Dept. announced that it was suing S&P for its actions in rating the complex securities that helped cause the global financial crisis by misleading investors with falsely high credit ratings on bonds backed by toxic subprime mortgages.

According to the L.A. Times:

S&P executives were motivated by a desire to increase the company's profits and delayed downgrading its AAA ratings on the mortgage-backed securities because it did not want to lose business from banks trying to package bad loans for sale to investors to get them off their books...

Lisa Madigan announces S&P suit. 

 In addition to the federal suit, California, Illinois and several other states filed their own suits against S&P on Tuesday on top of some existing state suits. S&P's intentionally misleading information of these securities could have contributed to the drubbing many state pension funds took during the past five years. The actions mean that 16 states and the District of Columbia will have suits against S&P.

The irony here is that it was Illinois Atty. Gen. Lisa Madigan who announced the state's suit against S&P while her father, political machine boss Mike Madigan, along with Quinn, used the threat of a poor S&P rating to launch the stampede on the pension fund.