Friday, October 3, 2008

Illinois investments hit by financial meltdown

AP:
The financial turmoil on Wall Street is costing Illinois money.

State finance officials predict less money coming in because of a drop in interest income, and they say some pension investments took a hit.

The Illinois treasurer's office predicts interest income on the $14 billion it invests could be as much as $237 million less this fiscal year than the $375 million it made last year.

That money is contributed to the state's general revenue fund to help pay operating expenses.
Here's another AP on practically the same subject, but with a little more info:
State Treasurer Alexi Giannoulias' office predicts interest income on the $14 billion it invests could be as much as $237 million less this fiscal year than the $375 million it made last year. That's money that gets contributed to the state's general revenue fund to help pay operating expenses. But it's only a fraction of the $29.5 billion general revenue fund in the budget the Legislature approved this year.

Just like individual investors, Illinois and other states are grappling with the fallout from a financial meltdown that has sent stocks plunging and paralyzed the credit markets, prompting Congress on Friday to approve a $700 billion rescue plan to help shore up the financial industry.

"The impact on ... every state is going to be huge. The impact on Illinois, it's going to be significant as well, now it's not as bad as California," Giannoulias said.

California Gov. Arnold Schwarzenegger has said that state may have to turn to the federal government for help with short-term borrowing to pay its bills.

Illinois has no immediate short-term borrowing plans, said Kelley Quinn, a spokeswoman for Gov. Rod Blagojevich, in a statement.

But sagging financial firms have hit the holdings of the Illinois State Board of Investment, which oversees state pension systems money.

The board, which has an $11.1 billion portfolio, saw $34 million in losses from some stocks and bonds tied to firms like bankrupt Lehman Brothers and troubled insurer AIG.

The biggest hit was a $26 million loss on AIG stock as of Sept. 12, according to investment board executive director William Atwood. On Sept. 16, the U.S. government announced an $85 billion emergency loan to rescue AIG.

But Atwood said any losses have to be kept in perspective because the pension fund's equity portfolio is $6 billion.

"To anybody that's a lot of money but it's a $6 billion portfolio ... that will come back," Atwood said.

No comments:

Post a Comment

PLEASE READ FIRST!!!! Comment Moderating and Anonymous Comment Policy

While anonymous comments are not prohibited we do encourage you to help readers identify you so that other commenters may respond to you. Either read the moderating policy for how or leave an identifier (which could be a nickname for example) at the end of the comment.

Also note that this blog is NOT associated with any public or political officials including Alderman Roderick T. Sawyer!