I still don't have any money

The Denver Post is writing Suit may be next step to recover $64 million.

Attempts to recoup about $64 million in taxpayer money invested by former Jefferson County Treasurer Mark Paschall shortly before he left office have come up with nothing.

"I still don't have any money," current Treasurer Faye Griffin said Wednesday.

Griffin hasn't heard from Capital Securities of America, an Ohio-based firm that brokered what state officials say are improper investments.

Griffin has sent two letters to the firm - one in January and one early this month - demanding it repurchase the securities. Colorado Treasurer Cary Kennedy also notified Capital Securities in a June 6 letter that state law requires the repurchase of the improper securities within one business day of the demand letter from the county.

Griffin said her office is closely watching the market for an upswing so the securities can be sold at the best possible rate. "If there is any chance where we can look good," Griffin said, "we're going to sell and then go to court for the difference."

State and county officials have questioned the legality of four investments in collateral mortgage obligations, or CMOs. The law prohibits most public entities from purchasing CMOs unless the securities are rated by at least two independent national rating agencies and at the highest level, according to the Colorado attorney general's office.

Kiss that $64 million goodbye. More so if one is "closely watching the market for an upswing so the securities can be sold at the best possible rate".

If by some miracle there is a short term upswing I am quite sure that Jefferson County will be looking for more (as in to get out even). As for filing a lawsuit... It's hard to collect from an entity that is bankrupt.

The details are sketchy here so I am making assumptions, but all in all the odds of Jefferson County getting out whole on this bet seem close to zero.

Still I have to laugh at this little ditty "The law prohibits most public entities from purchasing CMOs unless the securities are rated by at least two independent national rating agencies and at the highest level, according to the Colorado attorney general's office."

Excuse me but who cares what the ratings are? As I said in Lawsuits Fly - Stupidity Rules in Alaska

Here's honesty for you: "Moody's has no obligation to perform, and does not perform, due diligence." Starting with "does not perform, due diligence" I doubt that truer words were ever spoken. A lawsuit will likely decide whether or not Moody's has an obligation.

Given that Moody's professes to not do due diligence, who gives a damn what Moody's says?

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/