* This seems like a good idea…
llinois state Treasurer Alexi Giannoulias plans to make a $1 billion deposit in the state’s banks, giving them needed cash for borrowers in a bid to dismantle a credit jam and brace the state during the financial crisis.
Giannoulias told The Associated Press he will make the money available to interest-bearing bank accounts by shifting it from lower-yielding investments in one of the first sweeping moves by a state government to face down a menacingly volatile economy. […]
“The foundation of healthy local economy is a strong local lender,” Giannoulias said. “We want them to know that the state’s banker has confidence in our local lenders. As soon as we give them the resources and the capital to continue lending, we can keep businesses open and we can keep jobs here in Illinois.” […]
The billion-dollar bank deposit will move state money away from more conservative investments whose returns are dropping as skittish investors flock to them, Giannoulias said. But the bank deposits will be protected by collateral, he said.
Maybe those banks will loan a bit of money to the state vendors who aren’t being paid in a timely manner and are teetering on the brink.
* Things are getting really bad out there, of course, and Chicago’s budget woes are huge. Buried beneath the bright, shiny ball of yet another Chicago Police Department reorganization is this important, but overlooked nugget…
Meanwhile, Daley hopes to save $10 million by slowing down police hiring next year. He proposes hiring only 200 officers. Mark Donahue, the president of the Fraternal Order of Police, warns that attrition could cause the department to be 850 officers under its sworn strength of more than 13,500 officers by the end of 2009.
The cops expect to the ranks will naturally attrit 450 officers by the end of this year, which will leave the city way short even if those new badges hit the streets.
* Here’s part of that big reorg announcement…
The current first deputy superintendent — who has traditionally run the department from day to day — would become the assistant superintendent of operations.
Ooooo. I’m so tingly.
* Two priceless quotes from Hizzoner…
“The [police] union doesn’t like change,” Daley said. […]
“No,” the mayor said. “The [police] morale is good.”
What the police union and most of its members really don’t like is that they’ve been working without a contract for months. Not good.
* Yes, there is a real budget problem…
Mayor Richard Daley warned Wednesday it will take longer to repair potholes and replace burned-out streetlights as he unveiled a 2009 budget plan that would slash the city’s workforce and increase a long list of taxes and fines.
The mayor said his proposal would close a $469 million shortfall and be the first step in a four-year plan to grapple with hard times.
“We think next year will be worse,” Daley told the Tribune’s editorial board after presenting his plan to the City Council.
Even factoring in modest increases in now-plummeting tax revenues, city officials project budget shortfalls of about $200 million a year in 2010, 2011 and 2012. Wages and benefits will grow by about $150 million a year, largely due to the 10-year deal that Daley reached last year with labor unions representing many city workers.
…But with crime skyrocketing and the economy tanking (which is almost always followed by increased crime rates), is this the right time to be cutting back on the police force?
* More bad news…
* Pace proposes a 25-cent fare hike
* Highlights from Mayor Daley’s budget
* ‘This is not a good time’
* In tough times, Daley crafts sensible budget
* Daley’s bad-news budget
* Amid economic woes, museums tighten belts
- Thanks for taking my call - Thursday, Oct 16, 08 @ 11:20 am:
“Giannoulias a bright spot on a dismal day” Oh Rich, you want to stop ‘hugging’the State Treasurer….this is afterall Illinois.
- Rich Miller - Thursday, Oct 16, 08 @ 11:21 am:
You saying I’m wrong about the headline?
- The Doc - Thursday, Oct 16, 08 @ 11:21 am:
Daley got a huge pass from just about everyone regarding that sweetheart deal with the unions.
$150 million per year growth in wages in benefits is excessive even in the most robust of economies, and the deal only includes a fraction of the unionized city workforce. What a boondoggle this is turning out to be, and as usual, it’s all about the Olympics at any cost.
At least, at this point, Blagojevich is relatively impotent, his power having been significantly drained by the GA and the courts. But Daley continues his hatchet jobs unabated, with a compliant city council and a local media that seems very reluctant to scrutinize his decisions as opposed to Blago or Stroger.
- VanillaMan - Thursday, Oct 16, 08 @ 11:25 am:
I’m writing a children’s book for Illinois voters, “Alex and His Daddy’s Big Big Bank”
It is the story of a Greek basketball player who gets the nod for state treasurer from a basketball buddy newly elected Senator, so Alex registers to vote and uses his daddy’s big, big, bank as proof of his political acumen and banking knowledge.
He is a hit during his first couple of years, but discovers that a guy named Tony Rezko mentioned Alex and his daddy’s big, big, bank to the FBI as an informant.
- Heartless Libertarian - Thursday, Oct 16, 08 @ 11:29 am:
Would this billion dollar deposit force the banks to do anything, or could they put this money into their reserves and not loan the money out? Just wondering, because this could be a “bright spot on a dismal day” or could be just one more idiot move by a chicago democrat.
- wordslinger - Thursday, Oct 16, 08 @ 11:30 am:
The treasurer’s expanding an existing program. That’s fine in normal times, but as we know these aren’t normal times.
And we can’t think of these as deposits as you and I make, which, if we’re smart, are guaranteed by the FDIC. These are collateralized short-term loans to the banks.
My question is, what’s the collateral and who’s ascribing the value? And are there any requirements for local lending? The press release from the treasurer’s office was silent on both points.
- cermak_rd - Thursday, Oct 16, 08 @ 11:36 am:
Do more police hired actually reduce crime? From my perspective, the police usually come when they’re called, after the crime has occurred. Certainly more detectives means more crimes can be solved and since many crimes are committed by repeat offenders, that can reduce crime by a lot. So why not reduce traffic patrols and wondering patrol cars and concentrate on keeping detectives and parole officers?
I will say, though, that a lot depends on how the police are used. In Oak Park, which is the ‘burb to the north of where I live, I can walk most of the perimeter (Roosevelt & Austin to Harlem & Nroth Ave are the corners) on a weekend morning (it’s a 9+ mile walk) and see at least 8 police cars (or perhaps sometimes it’s the same car, I don’t look that closely) during that 3 hour walk. In a similar walk in Berwyn, I might see 1 police car. I would imagine the 2 ‘burbs have similar police staffing. Oak Park’s policing model might actually reduce crime simply by its omnipresence, whereas Berwyn’s doesn’t seem to.
- Pat collins - Thursday, Oct 16, 08 @ 11:37 am:
These are collateralized short-term loans to the banks.
What it does is increase the bank’s capital, and so it’s ability to make loans.
Essentially, the same thing the Fed is doing at a massive scale by lowering the rate it loans money to banks at.
- LTM - Thursday, Oct 16, 08 @ 11:38 am:
Has anyone seen more about the CPD reorganization? It seems like they are moving a lot of people around with minimal cuts to any of the Deputies or exempt positions. CPD is by far the biggest chunk of the City Budget and there seems to be very little budget oversight with any of the beat writers for CPD or City Hall.
- wordslinger - Thursday, Oct 16, 08 @ 11:43 am:
Pat Collins, understood. I’m interested in the collateral guidelines and if there are any requirements to make local loans. Didn’t see anything on the Treas. website.
- Collateral - Thursday, Oct 16, 08 @ 11:50 am:
Here’s the collateral agreement. The last two pages list the legally permissable types of collateral and the amount of collateral that must be pledged depending on the type. For collateral that has fluctuating value, those assets are priced daily and any reduction in value that brings the total pledged collateral below the necessary value triggers a requirement of the bank to pledge additional collateral by 2pm of that day to make up the difference.
- Bill S. Preston, Esq. - Thursday, Oct 16, 08 @ 11:59 am:
VM- Your sarcasm doesn’t really hit the mark. Not only does Broadway Bank not get to participate in the program and is strictly forbidden from doing any business with the Treasurer’s office, the Treasurer has been successfully managing the state’s portfolio for almost 2 years now. So let’s get over the fact that his dad started a bank and then let his son - who had a degree in economics and a law degree - work in the bank. He’s proved himself to be worthy of the office he holds.
And his name is Alexi, not Alex. Sheesh.
- Anonymous - Thursday, Oct 16, 08 @ 12:00 pm:
Who picks the lucky banks?
Nice timing right before an election…wonder how much campaign donations may improve? Imitation is the greatest form of flattery.
- Collateral - Thursday, Oct 16, 08 @ 12:03 pm:
Banks are prohibited from making campaign contributions.
- North of I-80 - Thursday, Oct 16, 08 @ 12:05 pm:
Chicago must be racing Detroit to the bottom:
Fewer cops? What will businesses do with rising crime AND rising taxes?
Giuliani reversed & cut crime in NYC by 1) adding 3400-3800 cops to flood the streets [some say 12,000 more] 2) community policing on foot [more cops accessible] and 3) empowered & held district captains responsible for everything that happened in his/her precinct. Do all 3 here & it could work…. not fewer cops.
- Grim Reaper - Thursday, Oct 16, 08 @ 12:05 pm:
“We think next year will be worse,” Daley said….
The analysis in the mainstream media have focused primarily on current; and some near term operating budgets and the impact the more immediate impact that the economic conditions will have.
Just wait until the actuarial valuations for the already woefully under-funded defined benefit public pension systems get released next year. The asset values of the investment portfolios will have likely taken large double digit losses, and the funded ratios of many of these plans will likely fall exponentially, and could not come at a worse time.
There are more than 37 million Americans 65 and older, a number that is expected to nearly double by 2030, according to the Census Bureau. More importantly, there are about 78 million baby boomers, those born from 1946 to 1964 and the oldest of which begin turning 62 this year and are looking to retire if they have not already done so. The number of “retirement age” public employees is set to grow exponentially each year for the next 20 years as well.
The defined benefit public pension plans have promised them a fixed annuity; and many with an annual COLA benefit, for the rest of their lives. The life expectancy tables for the oldest of these people is about 17 years for men; and almost 22 years for women, and that number grows longer for those younger but who have not yet reached traditional retirement age, but will soon.
The pool of beneficiaries collecting benefits is about to explode, at the same time that the assets side aside to pay them from is imploding.
Where is the money going to come from now to pay for all of this?
As you pull up a seat at this poker table; if you look around the table and you can’t tell who the sucker is, it’s you. …
- wordslinger - Thursday, Oct 16, 08 @ 12:16 pm:
Collateral, thanks, don’t know how I missed that.
- Upstate - Thursday, Oct 16, 08 @ 12:16 pm:
I’m not sure its going to do much for lending if the banks have to set aside collateral, especially with every financial institution scared to do anything but hoard cash and protect their balance sheets.
On Daley, someone should find out how much debt is on the city’s books and what a sustained downturn could mean. He’s had nothing but boom times until now and, like a lot of Americans, he borrowed heavily while the national economy soared.
- Captain Flume - Thursday, Oct 16, 08 @ 12:23 pm:
Hey, didn’t I read about this bank story early this morning in the Morning Shorts section? Who posted that, I wonder.
- publius - Thursday, Oct 16, 08 @ 1:28 pm:
the problem is that we can’t get trustworthy appraisals of collateral in this crisis—by the way,if the state is sitting on $8 billion, why don’t they help the state economy by paying their bills instead of helping the bankers?
- Loop Lady - Thursday, Oct 16, 08 @ 2:05 pm:
yeah, this could be interesting although off topic:
Is Rezko singing about Broadway Bank, or Banks’ bank, or neither? VM and I are thinkin’ da same ting here…
- VanillaMan - Thursday, Oct 16, 08 @ 4:39 pm:
==Your sarcasm doesn’t really hit the mark.==
And some bloggers don’t have a sense of humor either.
As Governor Palin would say, “God love ya!”. It takes a village to create this great big blog of Rich’s!
- VanillaMan - Thursday, Oct 16, 08 @ 4:42 pm:
==And his name is Alexi, not Alex. Sheesh.==
Yeah. Alexi! It sounds even cuter than Alex! Maybe the next Illinois Treasurer will have “Candy” or “Bambi” for a first name!
“Alexi and His Daddy’s Big, Big, Bank” - yeah, that’s even better!
- Plutocrat03 - Thursday, Oct 16, 08 @ 5:21 pm:
If the state has a billion to park, could they just pay their bills?
- Arthur Andersen - Thursday, Oct 16, 08 @ 6:40 pm:
Just remember fellas, Stu the Stoolie did a lot of singing, too, but all his tunes turned out to be off-key, to be polite. Cut Alexi some slack.
- Snidely Whiplash - Thursday, Oct 16, 08 @ 7:57 pm:
Nice press pop, Alexi. Governor’s race, anyone? ;)