Freeze Is On In Florida

Freeze Is On In Florida
http://globaleconomicanalysis.blogspot.com/2007/11/freeze-is-on-in-florida.html
The State of Florida has frozen withdrawals from school investment funds trapped in ABCP. Some districts managed to get out but those left in the fund are going to bear the brunt of the losses. Those losses are not possible to calculate at this time. The sad fact is there simply is no market for a lot of the junk remaining in the fund.
Mish

What a hoot:

"Even though the fund has consistently made money for local governments since it was created 25 years ago, those governments had pulled nearly $13.5 billion from the pool in the past two weeks, including $3.7 billion on Thursday morning.

Local withdrawals

Here's how much local governments recently withdrew from a state-run investment pool:

Palm Beach County School District: $357 million

St. Lucie County: $100 million

Palm Beach County: $80 million

Delray Beach: $65 million

St. Lucie County School District: $64 million

Boynton Beach: $56 million

West Palm Beach: $55 million

Stuart: $26 million

Boca Raton: $13.3 million

There were about 400 withdrawals Thursday, including $53 million by the St. Lucie County School Board, $52 million by the town of Palm Beach, $41 million by Boynton Beach, $21 million by Palm Beach Gardens, $12 million by the Greater Boca Raton Beach District, $8 million by West Palm Beach and $7 million by St. Lucie County.

The withdrawals were a reaction to news that a fraction of the fund's investment portfolio was downgraded because of the mortgage crisis.

To protect the remaining $15 billion in the investment pool, including $2 billion from Citizens Property Insurance - the largest single account left in the fund - the Florida State Board of Administration halted further withdrawals until at least Tuesday. The board includes Crist, state Chief Financial Officer Alex Sink and Attorney General Bill McCollum.

If the pace of recent withdrawals had continued, the state board could have been forced to sell the pool's troubled securities at a deep discount and left some governments with the losses.

"What happens to the participants who have the last $2 billion in the pool?" Sink said. "They get zero."

Sink, who requested the emergency board meeting Thursday, said the remaining investors should help decide the next step so "the pain can be shared."

http://www.palmbeachpost.com/storm/content/state/epaper/2007/11/30/m1a_flafin_1130.html

So now the suckers who did not get out, can comfort each other and "share the pain". Last one out of the pool doesn't get a towel as per Warren Buffet's prediction.

My bold:

"Dec. 4 (Bloomberg) -- Florida's pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and forced officials to freeze withdrawals....

Like the hundreds of school districts and towns unable to access $14 billion frozen in the Local Government Investment Pool, Florida's 1.1 million current and retired state workers rely on the board's management to boost returns on the funds that pay their pensions. That has left them vulnerable to the same potential for losses. A state-created home insurer and the treasury are also at risk....

Citizens Property Insurance Corp., an insurer created by the state five years ago to provide hurricane coverage to residents in high-risk areas, has half its $10 billion of assets managed by the state board. That includes more than $3 billion of cash moved from private money managers this year in an effort to save $2 million annually.

Frozen Funds

``Citizens was not going from a risky position to a conservative position, but from a conservative position to a more conservative position,'' said John Forney, an adviser to Citizens and managing director for public finance at Raymond James Financial Inc., at an Aug. 2 investment committee meeting.

The insurer pays St. Petersburg, Florida-based Raymond James a $10,000 monthly retainer to provide investment policy advice.

Citizens has $1.9 billion, or almost 20 percent, of its assets frozen in the local government pool, and $583 million of subprime-tainted debt that was bought by the state board, according to the documents obtained by Bloomberg."

 http://www.bloomberg.com/apps/news?pid=20601103&sid=aEWz6lIRbqE4&refer=us

What's that mean about "the treasury"?

SIgnificant smoke here. Looks like Abu Dhabi could get a good deal in FLA, any Public Assets ready For Sale?