To paraphrase the late Senator Everett Dirksen, a handout here, a handout there, and pretty soon it adds up to real money.
The latest supplicants looking for alms from the Federal purse are state governors on behalf of local governments hit by the auction rate securities debacle. So far, they have not developed a proposal. It’s surprising to read seasoned pols admitting that their constituents are in pain, yet at a loss as far as a course of action is concerned.
U.S. governors including New Jersey’s Jon Corzine and New York’s Eliot Spitzer may ask Congress to help reverse rising municipal debt costs stemming from the subprime mortgage market’s collapse, Washington Governor Christine Gregoire said.
Gregoire, Corzine and Spitzer joined other governors Feb. 24 in forming a group that will “produce something that gets us out of the problem, but most importantly produce something for Congress” to deter a future borrowing squeeze, Gregoire, a Democrat, said during a National Governors Association meeting in Washington yesterday…
“A lot of governors really hadn’t anticipated that,” Gregoire told reporters in Washington. The group, which plans to meet soon, hasn’t discussed specific solutions, she said….
House Financial Services Committee Chairman Barney Frank said his panel at a March 5 hearing will examine how state and local governments are being affected by the reduction in credit created by rising mortgage defaults and bond insurer downgrades….
“I don’t know that any of us has a specific right now,” said Gregoire, a former attorney general elected governor in 2004. “We will be working on how we will do an adjustment” to higher borrowing costs for states, local governments and agencies….
An index that tracks the average rate on seven-day auction securities rose to a record 6.89 percent on Feb. 20, the highest since the Securities Industry and Financial Markets Association started compiling the figures two years ago.
The index, released publicly through the U.S. bond markets’ New York-based trade group five days after Thomson Financial compiles the data, climbed from 6.59 percent a week earlier and averaged 3.81 percent during the past 12 months.
Jefferson County, Alabama, paid an extra $6 million in interest on its variable-rate, sewer-project bonds in the last four months.