We have written earlier about the parlous state of Illinois’s and Chicago’s pension funds for public employees. It is good sport to follow what happens when a government is controlled by Democrats for decades on end. However, the state is bipartisan at least to the extent that several recent Democrat and one Republican governor have served jail time. The state is in the news again, this time standing accused of fraud by the Securities and Exchange Commission. For only the second time in history a state is accused of defrauding investors in its public pensions bond issues by lying about the pensions’ financial condition from 2005 to 2009. The bonds in question totalled more than $2.2 billion. It will surprise no one that the underwriter, Bear Stearns, made “improper” payments to then Governor Blagojevich in order to get this business. This corruption is nothing new, nor is the underfunding of the pension system, which has been going on for three decades. We note that the Illinois legislature, under heavy pressure from government unions, recently rejected the modest pension reforms proposed by the Governor. This disaster about to happen has prompted some to call for a Federal bailout. But in the words of President Obama, there is no “immediate” crisis.
This only made the news as a settlement was announced. The terms of the deal are that Illinois accepted a slap on the wrist, admitted no guilt, instituted a few reforms, and promised not to do it again. No penalties were assessed.
We can imagine what the penalties would have been had a private firm made such “improper disclosures.” The hatred of “big business” and indulgence for government embedded in the DNA of progressives has infiltrated the SEC. It is worth noting that the madness of the Illinois state government is not limited to finances. Governor Quinn has urged his Attorney General to appeal the Federal court decision reaffirming the Second Amendment rights of Illinois citizens.