We Are One Illinois, the labor coalition trying to stop cuts to public employee pensions, is blaming the Civic Committee for the fact that the state will have to pay an extra $130 million in interest on public works bonds issued last month.
The state issued the general obligation bonds on June 25, at a rate of 5.042 percent -- higher than it’s offered in the past, as a result of downgrades to Illinois’ credit rating. On June 6, Moody’s Investor Services bumped the state’s rating to A2, the lowest in the nation, because “the government will not take action to reduce the state’s pension liabilities any time soon.”
Gov. Pat Quinn blamed the General Assembly’s failure to pass pension reform.
“Without the downgrades the state has suffered as a result of inaction on its pension shortfall, the rate would have been lower, based on the prices other units of governments that did not suffer similar downgrades earned Wednesday,” Quinn said in a statement.
But We Are One Illinois, which does not want reductions in pension benefits, has its own culprit: Ty Fahner, president of the Civic Committee of the Commercial Club of Chicago. As Ward Room reported, Civic Committee members tried to persuade Wall Street to lower Illinois’ bond rating, hoping the higher interest prices would create public pressure for pension reform.
We Are One is calling for investigation of whether Fahner or other Civic Committee members profited from the downgrade:
“Did members of the Civic Committee speak to the ratings agencies — as Fahner clearly stated initially? If so, what transpired? Did any Civic Committee members profit from these actions? How did the role of Fahner’s law firm as state bond counsel and the role of many Civic Committee members as bond underwriters impact their efforts to lobby to reduce the state’s rating?
“Ultimately, which story should the public believe? Every Illinoisan deserves to know what really happened. We urge elected officials and the news media to demand answers to these lingering questions, uncover what occurred, and examine whether formal consequences are warranted.”
Blogger Fred Klonsky takes it a step further:
This week Illinois will pay an extra $130 million in interest on bonds because of Fahner’s lobbying efforts.
Where is the Attorney General?
Why no investigation?
Where is the press?
Why no stories?
Are they afraid of the Committee of the rich and powerful?
Clearly, the Civic Committee went too far by trying to use its rich-guy influence to tank Illinois’ bonds. But the labor movement is also going too far in suggesting the Civic Committee was solely to blame, or criminal in its actions.