July 23rd, 2008
Cover Story • BEST OF PORTLAND: By the People, For the People0 comments
July 23rd, 2008
Made Marion | Growers of marionberries try to rescue their crop from attack.2 comments
July 23rd, 2008
Murmurs • We still believe in Harvey Dent.0 comments
July 23rd, 2008
Rogue of the Week • Outlaw cyclists | Road rage rides on two wheels.16 comments
July 23rd, 2008
Cycling under the influence | Safer than driving? Maybe. But still very illegal.1 comment
July 23rd, 2008
A Separate Peace | Activists want Portland to be a sanctuary for AWOL soldiers.8 comments
July 23rd, 2008
Call Me Crazy | Man: HI. Woman: Y R U Bothering Me?4 comments
July 23rd, 2008
The Hole in the Fiber Doughnut | Commissioner Dan Saltzman wants fiber in the city’s web diet.5 comments
July 23rd, 2008
Mystery Raid | Federal seizure of local charity’s computers puts Iranian community on edge.3 comments
July 23rd, 2008
The Score • Nazis, terrorists and gamblers join the listening circle.1 comment
![]() IMAGE: cari vander yacht |
[December 5th, 2007]
Billions with a “b.” That’s how much local government agencies from Miami to Seattle have invested in an exotic type of supposedly safe security that’s plummeted in value recently.
But we bring you good news for a change in Oregon. Things are different here, thanks in part to a little-known Portland investment broker and a retired Eugene bureaucrat who in 1994 rewrote state law regarding permissible public-sector investments.
In 1993, state legislators appointed Lana Lindstrom, then Eugene’s treasury manager, to chair a committee charged with rewriting laws governing how local government entities could invest their short-term cash. Lindstrom, 59 and now retired, says David Sloop, a broker then with Bank of America in Portland, provided technical knowledge.
“Dave was particularly careful about paying attention to credit quality,” Lindstrom recalls.
The committee restricted entities such as city and county governments and school districts to investing only in securities for which collateral was transparent and easily valued.
“We thought that it was not appropriate to rely solely on ratings in cases where it was not obvious to ‘see’ what the credit was,” says Sloop, now 50 and working for Finacorp Securities.
Fast forward a decade to when investment bankers invented securities called “structured investment vehicles,” or SIVs. SIVS are off-shore investment vehicles that buy subprime mortgages and debt backed by more esoteric collateral. They finance those purchases through short-term borrowing, often from public bodies.
Although most SIVs carried a top AAA rating, their values have crashed since this summer. Some have defaulted, leaving investors, such as King County, Wash., and Montana in the lurch. The biggest disaster, according to Bloomberg News, is Florida’s Local Government Investment Pool. When locals there discovered the fund had 7 percent of its assets in SIV-like investments, they drew the $27 billion fund down to $15 billion in the past month, before the state froze withdrawals. It is unclear how much public money investors lost.
Local governments in Oregon can invest their money themselves or through the Oregon Short Term Fund, which holds about $12.5 billion in local and state money. The 1994 law precludes direct investment in SIVs, and the Short Term Fund has also stayed away from them.
Oregon state agencies, unlike local governments, can invest in SIVs. But Perrin Lim, who runs the Oregon Short Term Fund, says, “We have zero exposure to SIVs and have taken no write-offs.”









Considering how much BoA is going to be writing down, I wouldn't have full faith in that. The basic facts are that all the banks are insolvent. They have next to no backing. All this supposed value is based on debt and phony accounting. It's all just a matter of time before it's collected on and then the real show will start. Physical commodities are the only thing I would be trusting right now. Specifically metals. 2008 is going to be a real show of what's to come. It's not going to be pretty at all.