Comments on Advance Indiana™: Ice Miller Profits From Water Company Debacle

Doesn't K. Hupfer figure in with these guys now? ...

2009-05-28T14:29:24.083-05:00

Doesn't K. Hupfer figure in with these guys now? The Governor let him pal around with the lobbyists while doing his itty bitty stint with IDNR - and now he can use all those contacts. Even probably has a bright political future ahead of him. Hurray for connecting administrative appointees with legal firms. That way the tax payer gets the biggest shaft from both.

Maybe Jon it's not so much we rewarding them, but ...

2009-05-27T13:08:16.984-05:00

Maybe Jon it's not so much we rewarding them, but the ignorant. I call it the ostridge mentality. I lived by it a long time. I would stick my head in the ground and would pull it up every now and then to see all the bull crap going on and then I would put my head right back down in the ground, hoping that the next time I pulled my head up it would be better....but it wasn't.....and I doubt it ever will be.

So why do we choose the same people everytime we n...

2009-05-27T00:57:52.768-05:00

So why do we choose the same people everytime we need a bond issue? Why do we reward the same people who erred so badly? Why do we reward their incompentence?

It's laughable, Paul. Anyone who follows governmen...

2009-05-26T05:50:36.001-05:00

It's laughable, Paul. Anyone who follows government bond transactions in this state knows that Ice Miller leads government leaders around by the nose.

Didn't the Ice Miller bond attorneys say their job...

2009-05-26T05:37:18.761-05:00

Didn't the Ice Miller bond attorneys say their job was not to offer fiinancial advice? How could it not be their job? What is the purpose of even hiring expensive bond counsel from a law firm?

I know, I know...political patronage, pure and simpl.e

The following is from Lamont's website: Lamont is...

2009-05-25T23:23:36.675-05:00

The following is from Lamont's website:

Lamont is a leading swap advisory firm, having negotiated or bid competitively over $6 billion of interest rate swaps and swaptions on behalf of its clients, and served as a co-advisor/bidding agent for an additional $3 billion. Presently, Lamont has served as swap advisor to a number of large municipal issuers including the State of Connecticut, the State of New Jersey, the Massachusetts Turnpike Authority, MBTA, the Massachusetts Water Resources Authority, Maine State Housing Authority, and the Connecticut Housing Finance Authority. Lamont has assisted issuers in the fields of transportation and housing in execution of swaps, and works with a variety of issuers who are considering swap options and forward refunding agreements.

Our general view is that derivative products should only be used to save money, hedge interest rate risk, and to capitalize on certain inefficiencies/opportunities between the taxable and tax-exempt markets. The advisability of such products should be based upon various additional considerations, such as duration matching, asset/liability management, redistribution of risk to other parties, and the availability of sufficient management and administrative support. Because Lamont can provide its clients with the necessary independent analysis to make informed decisions on complex derivative transactions, they can consider more efficient financing structures, without relying on investment banks or swap counterparties for analysis. Lamont prepares reports for various audiences, including legislative committees and Authority boards, outlining their derivative alternatives and the associated risks.

Lamont has considerable experience in the use of interest rate swaps to convert variable rate obligations to synthetic fixed rate debt, to provide a minimum rate of return on short term investments, as well as the use of forward investment contracts for escrows, debt service funds, and reserve funds. We have also provided evaluations to our clients on the proposed use of interest rate caps and floors, various inverse floater products, and Dutch auction floating rate securities. While some of these products have proven useful to certain issuers, we generally recommend them only if their pricing delivers substantial net benefits, including offsetting the cost of documentation and administration.

Lamont has provided significant analysis of opportunities for governmental issuers of tax-exempt bonds to use forward swaps as a means of currently locking in refunding savings for bonds that are not refundable for several years into the future. Our general advisory duties in connection with such swap transactions include the preparation of the swap documents and term sheet(s) for negotiated or competitive procurement.

Swaps and swaptions can be effectively incorporated to achieve specific goals, including refunding debt in low market rate environments; lowering borrowing costs; creating synthetic fixed rate debt on existing variable rate bonds; generating additional portfolio value, and improving the overall yield on an investment portfolio. In pursuit of such goals, we advise our clients to evaluate the amount of basis risk inherent in interest rate swaps and determine the most appropriate plan to manage that risk. As part of Lamont’s analysis in connection with entering into swaps, we use existing floating rate data to construct a LIBOR-based floating rate index that will best match the expected performance of the floating rate bonds. We can further adjust the index for anticipated changes in tax rates and imbed cancellation options in the swaps.

If you google Lamont Financial, you will find seve...

2009-05-25T23:20:37.938-05:00

If you google Lamont Financial, you will find several links to older stories where the company's advisors are touting the variable bonds with interest rate swap agreements as a means of reducing borrowing costs. In other words, if Lamont had been advising the water company in 2005 instead of Umbaugh, the water company would have likely received the same financial advice.

And what about the Tax Payers.....could this loss ...

2009-05-25T18:41:58.735-05:00

And what about the Tax Payers.....could this loss tried to be gained with an increase in rates somewhere down the road? Really enjoy your blog. Thanks for all the informative info. I have been behind the curve when it comes to political issues, but I am slowly changing that. Keep it up.

Doesn't Ryan Vaughn fit into this somewhere???

2009-05-25T16:59:23.050-05:00

Doesn't Ryan Vaughn fit into this somewhere???