Even the Federal Government Is Demanding Pension Reform in Illinois

Thanks for noticing, guysSECToday the U.S. Securities and Exchange Commission charged the State of Illinois with what is fairly obvious to anybody who had been watching its finances for some time: It had been misleading municipal bond investors about the state of its pension obligations.

From the SEC’s announcement:

An SEC investigation revealed that Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009. Illinois failed to disclose that its statutory plan significantly underfunded the state’s pension obligations and increased the risk to its overall financial condition. The state also misled investors about the effect of changes to its statutory plan.

Illinois, which implemented a number of remedial actions and issued corrective disclosures beginning in 2009, agreed to settle the SEC’s charges.

In their report (pdf) they note:

The pension systems of Illinois currently are among the lowest-funded plans in the nation. As of 2011, the systems collectively were underfunded by $83 billion, and system assets covered only 43 percent of system liabilities. The State’s current funding deficit was created in significant part by the State’s historical failure to fund its pension systems in a manner to avoid the growth of the unfunded liability.

The agreement between the SEC and the State of Illinois to settle the charges appears to be to, um, stop breaking these rules. Well, it’s not like fining them was going to do any good.

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  • mad libertarian guy||

    Another card in the house falls.

    I don't know when it will happen, but when the parasite class starts bouncing their checks, I'll be glad that I have guns.

  • bendover||

    You often hear from the progressives that brokers who misrepresent the health of the investments they're selling should do jail time. I await the call for the Illinois DA to bring an indictment.

  • LTC(ret) John||

    "I await the call for the Illinois DA to bring an indictment."

    HAHAHAHAHAHA! Lisa Madigan (daughter of the iron-fisted House Leader Mike Madigan) do anything against the cronies managing IMRF, ITRF, etc? Thanks for the belly laugh.

  • ArbutusJoe||

    Feds to Illinois: C'mon, yer gonna kill the host! It's all about pacing....

  • Paul.||

    It had been misleading municipal bond investors about the state of its pension obligations.

    Deregulashun!

  • EDG reppin' LBC||

    The state of Illinois is betting that FedGov will bail them out.

  • Paul.||

    That's a bet I'd make.

  • Hyperion||

    Because you think they can't? Do you think they are going to bail out Cali?

  • Paul.||

    No, because I think they will.

  • EDG reppin' LBC||

    I think they'll bail out Cali, Illinois, Detroit and anyone else who applies for relief. But hurry, because the next administration may not be so amenable to bailouts.

  • Scott S.||

    I don't see how they'll get a bailout through the current House.

  • Hyperion||

    Executive order. National emergency you know.

  • EDG reppin' LBC||

    Good point about the House. But couldn't POTUS do an end around and instruct the Fed to buy outstanding bonds? Or instruct the Treasury to make direct (cash) payments into city/state pension funds?

  • SweatingGin||

    I keep meaning to check, but haven't. Could the pbgc take them over?

    Maybe give PBGC jurisdiction over public pensions and a bailout, I could see that making it past Boehner.

  • LTC(ret) John||

    The only problem for the g'vmnt pensioners, is that if the Pension Guarantee folks take over, you get dimes and nickles on the dollars - and, dammit, they want it all!

  • entropy||

    Same way they got all the other bailouts through the same House?

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