Governor Bill Richardson, former presidential candidate and Secretary of Commerce nominee has withdrawn himself from consideration today. It turns out there is a investigation going on in New Mexico surrounding the relationship between the Governor's office, the New Mexico Finance Authority and a financial consulting company named CDR Financial Products. Apparently, in 2004 CDR donated $100,000 to Governor Richardson's efforts to register Native American and Hispanic voters. Shortly after, CDR performed advisory work for the New Mexico Finance Authority (the folks who raise financing for the state) and received $1.5 million in fees.
Bloomberg News is reporting that CDR also performed similar "advisory" work for Jefferson County Alabama. Remember Jefferson County? They almost became the largest municipal bankruptcy in our nation's history after advisers and Wall Street municipal and derivative desks turned their humble water and sewer works into the most expensive one in the country. It didn't become the most expensive water and sewer works in the country because everyone in Jefferson County got a gold plated toilet. No, it became the most expensive because the county was "advised" that rather than issue plain old fixed rate debt, they should issue floating "Auction Rate" debt (remember that little fiasco earlier in 2008 when the $300 billion Auction Rate market froze up and municipalities ended up having to pay penalty rates of 20%?), then convert that debt to fixed rate by paying on interest rate swaps and selling options on swaps. Wall Street and advisers like CDR made millions in fees while the municipalities like Jefferson County not only had their clocks cleaned with regard to pricing of all these derivatives, but also cocked up their finances so badly that they faced bankruptcy.
Governor Richardson's office denies that anything improper took place and CDR says there definitely was no, "Pay for Play" scheme going on here. Rather CDR, based in California, had a very strong desire to make sure Native Americans and Hispanics got out to vote and by sheer coincidence, they got to jump into bed with the New Mexico Finance Authority and got themselves paid $1.5 million in fees. I really want to see all the transactions they advised New Mexico on. I bet the amount of money that New Mexico was separated from was a lot more than $1.5 million. Just ask Jefferson County.
When is this going to end? How many people do we have in this country, 250 million? Why is it that most of the people you meet are honest, decent people who wouldn't sell themselves out for a dollar or a position of power and yet it seems 90% of the folks we have running things would sell themselves out at the drop of a hat? Anyway, I guess thats how things are. It kind of reminds me of this great Al Pacino performance in "Scent of a Woman". The whole scene is great, but pay particular attention to the 1:30 to 3:00 segment, "Conscience is dead".
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Posted by: G | January 04, 2009 at 11:30 PM