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Money Management
Florida's 'Run on the Bank'
Some lost confidence in the local investment pool. Some pointed fingers, and a few rose to the occasion.
Act of faith
On a conference call Nov. 30, members of a hastily assembled investor committee were further discouraged when SBA Deputy Director Kevin SigRist filled in for Stipanovich and proposed surveying investors about accepting 90 cents on the dollar in exchange for immediate access to their money. The investors declared it “unacceptable” to get less than 100%.
When the fund reopened Dec. 5, Blackrock had taken over management. Stipanovich had resigned, at the suggestion of Sink, who was frustrated at the continual surprises and the lack of effective communication with investors.
Sink has talked about outsourcing the management of the pool permanently, but it is not clear what that would give investors besides higher fees. (Blackrock is charging .39 cents on each dollar of troubled assets and .075 cents on the rest. SBA’s fee was .015 cents per dollar.) There could be legislation to let the state invest its funds in the pool, which Sink deputy chief of staff Baughman-McLeod says Sink explored but felt the law didn’t allow.
By year-end, outflows had fallen to a mere $1 million a day. And money was coming in. The Friday before Christmas, Miami-Dade’s Children’s Trust, a taxpayer-created entity, sent $44 million to the investment pool. “Yes, I want state institutions to be solid and strong,” explained former Miami Herald Publisher David G. Lawrence Jr., chairman of the trust. But the SBA also had delivered returns. “We’re not trying to make a killing. We want an honorable return because frankly it’s not our money. It’s the taxpayers’.”
But investors were not getting the same sense of strong confidence and tangible commitment from Crist & Co. Even now it’s not clear whether the troubled assets really will pay out for these faithful investors. It’s only clear that there aren’t enough Mary or George Baileys willing to take a big risk for the public good.
