WALL STREET JOURNAL: …It has been a busy few weeks for the Securities and Exchange Commission. In May, the SEC charged two cities—Harrisburg, Pa., and South Miami, Fla.—with securities fraud for allegedly deceiving investors in their municipal bonds…
With Harrisburg, however, the SEC has gone further and charged the city government with “securities fraud for its misleading public statements when its financial condition was deteriorating and financial information available to municipal bond investors was either incomplete or outdated.” The SEC says this is the first time the regulator has “charged a municipality for misleading statements made outside of its securities disclosure documents.”…
But officials in some troubled cities are pushing back against the notion that investors should get the best deal among creditors. Harrisburg City Council members have balked at a state-proposed bailout plan because they claim it places much of the burden on taxpayers without penalizing investors. Last year, City Councilman Brad Koplinski called the plan’s 1% increase in the state-imposed income tax on Harrisburg residents “a bad decision for the people of Harrisburg, people who did nothing to get our city into our fiscal crisis.”… (more)
EDITOR: The nerve of the citizens of Harrisburg. How much money will they give to the governor’s 2014 re-election campaign compared to what Tom Corbett will receive from grateful bailed out creditors who are owed $350 million and otherwise will have difficultly obtaining even half of that amount back in bankruptcy court.
If anyone has a reason to complain it is the citizens of Lancaster who will spend $150 million to buy a long plagued pig (Harrisburg Incinerator) in a toxic poke (‘Mt. Ashmore’ ash piles).
Newslanc’s statements connecting the Harrisburg financial situation with the Corbett reelection campaign is pure conjecture and without merit. Readers know that the city’s situation grew from mismanagement during the Gray administration, an administration elected and repeatedly re-elected by the voters of the city. Thus city councilman Koplinski’s claim that the citizens did nothing to get their city into financial crisis has no more validity than the relationship of the US National Debt to US citizens. Declaring bankruptcy should be a last resort since future city borrowing would be difficult if not impossible. It is quite likely that over the years city voters didn’t know what was going on because they didn’t want to know. Sometimes ignorance is not bliss.