By Steve Rhodes
The most vicious attacks against Alexi Giannoulias this primary season aren’t coming from his opponents in the Democratic primary for U.S. Senate, but from a candidate running for his current job as state treasurer: Justin Oberman.
Oberman is in a primary campaign against Giannoulias chief of staff Robin Kelly, but there is no way to separate his attacks on her performance in office from the performance of Giannoulias. David Hoffman should retweet Oberman’s every press release. Let’s review.
December 14: “Justin Oberman, Democratic candidate for State Treasurer said, ‘Last week, Illinois’ bond rating was downgraded by both Standard and Poor’s and Moody’s Investors Service and no one from the Illinois State Treasurer’s office has said a word. ‘The silence is deafening. I am stunned by the lack of leadership by the Treasurer’s office and other Illinois elected officials and candidates,’ said Oberman.”
December 22: “The Illinois State Treasurer’s settlement deal with Oppenheimer Funds, Inc., which cements a 44% loss of college savings for families across Illinois, is inadequate.
“Justin Oberman, Democratic candidate for State Treasurer, said, ‘This situation is intolerable – the State Treasurer’s office should have been better stewards of the families’ money. They should never have let Oppenheimer take these risks and a loss of this magnitude represents a breach of the Treasurer’s duty to safeguard the educational savings invested through the office.’
“Oberman continued, ‘It is inexcusable to call this a win for anyone–it is only a tiny mitigation of the harm caused by a State Treasurer and his staff who were asleep at the wheel. While we are pleased that families and hardworking students preparing for college will see some of their investment replaced, the risks should never have been taken. The Treasurer’s office should not have allowed the money to be placed in high risk funds like mortgage-backed securities and derivatives. A recovery of 56 cents on the dollar only compounds the Treasurer’s office’s mistakes.
“‘Though my opponent, the Chief of Staff for the State Treasurer, claims that under her watch the Treasurer’s office “lost no money,” the thousands of Illinois families who lost their savings in Bright Start and who had to cancel or delay their children’s college plans would strongly disagree,’ said Oberman.
“‘For months we have heard the loss pegged at about $85 million dollars and that 90% of the funds would be recovered. Where did the $150 million dollar figure come from and what happened to the 90% recovery?’ Oberman said.
“A recovery in April 2010 for funds needed in the fall of 2008 certainly doesn’t help families gain back the 2 years they are now behind in school or new debt they have taken on from lenders.
“When the State Treasurer’s office was asked for information about the Core Bond Fund in a Freedom of Information request, they responded that they did not even have a Core Bond Fund Prospectus in the office, the most basic piece of information to judge any investment.
“‘The State Treasurer and his Chief of Staff have shown a cavalier attitude toward their stewardship of the Bright Start funds. They did not perform the basic due diligence to safeguard the investments and they are now bragging about the recovery of only half the original loss. When I am Treasurer, the office will not operate this way. My office will conduct thorough research into every state investment that we make to insure minimum risk and maximum return,’ said Oberman. ‘We will make sure that investments are made in appropriate funds and are managed carefully. I will be watching out for taxpayers, not gambling away their children’s futures.'”
January 6: “Kelly has claimed that she was surprised to find out that the manager of the fund, Oppenheimer, had been investing in high-risk vehicles like mortgage-backed securities, credit default swaps and derivatives. However, finance industry press reports reveal as early as July 2006, fund managers were dealing in mortgage-backed securities and similar high-risk products. If indeed Kelly was unaware that Bright Start funds were being invested in this manner, then it appears that she did not perform the due diligence that Illinois families were promised from the Treasurer’s office.
“Public statements made by Kelly and others from the Treasurer’s office for months have described the total loss in Core Bond at $85 million. However, when the recent settlement was announced, Illinoisans learned that the loss was in reality around $150 million, nearly double what they were told. That represents a pretty staggering discrepancy and one that demands an explanation. Why did Kelly not share with Illinoisans the true magnitude of the loss if she was charged with running the office?
“To defend the atrocious loss, Kelly routinely tries to diminish its extent by claiming that the loss was contained to only one fund. Indeed, it appears that Illinois families were also exposed to the same reckless investing under the Oppenheimer Limited-Term Government Fund marketed by the Treasurer’s office. Moreover, exposure to the Fund’s losses weren’t only felt by families investing exclusively in the Core Bond Fund. That loss was also spread to families who invested in other packages marketed by the Treasurer’s office with some experiencing a 20% loss in value. Is Kelly aware of how broad the impact actually is?”
January 20: “If I am elected, I will work hard to make the Treasurer’s office work for all Illinoisans. I will clean up Bright Start and make sure that the Treasurer’s resources are deployed in a way that helps create jobs and grows the economy.”
January 27: “Democratic Candidate for State Treasurer Justin Oberman has launched a significant paid media campaign including a major buy in Chicago broadcast, cable and radio in every market in the state in support of his bid for the office.
“Both the television and radio ads emphasize Oberman’s qualifications and Robin Kelly’s bungling of the Bright Start program, which resulted in a $150 million loss for families saving for their children’s education, and Kelly’s subsequent cover-up of the extent of the loss.”
January 27: “Robin Kelly Loses $150 Million for Illinois Families, Says She Wouldn’t Do Anything Differently.
“I really can’t think of what we could have done differently,” said Robin Kelly, Giannoulias’ chief of staff.
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Oberman hasn’t made an endorsement in the U.S. Senate race, but he obviously can’t get behind Giannoulias. And if Giannoulias and Oberman both win their respective nominations? Awkward!
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From Kelly:
* Help Me Set The Record Straight
* Endorsements and interviews
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Comments welcome.
Posted on January 28, 2010