IBJOpinion

Bond swap story was valuable

July 17, 2010
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IBJ Letters To The Editor

I just wanted to say “well done” regarding your [July 5] article [on bond swaps]. The subject of your report has been a topic near and dear to my heart for about two years.

My interest originated with the class-action I filed on behalf of three plaintiffs against Veolia Water and the city of Indianapolis with respect to certain aspects of the management of Indianapolis Water. Research into the issues involved in this lawsuit led to the extraordinarily complex tangle of financing which is highlighted in your article. I am gratified that the topics you identified in your article have finally received the public scrutiny they deserve, especially the involvement of CDR Financial, an organization that has sewn financial ruin across this country.

The only shortcoming I see in your otherwise excellent article is, in the case of Indianapolis Water, the direct connection between the swap debacle and the rate increase being sought by Indianapolis Water before the Indiana Utility Regulatory Commission of over 30 percent. Indianapolis Water has presented this rate increase to the public as needed to make costly infrastructure improvements—when in reality it is largely an effort to recoup the $50 million “bet” that they lost on the bond market.

I think it ironic that in the minutes of the meeting of the board of directors of the Department of Waterworks of Nov. 17, 2005, where it announced the bond issuance highlighted in your article, one of the board’s advisers specifically stated that “debt service will not increase” and specifically thanked CDR Financial for its involvement with the transaction. People need to understand that this sort of screw-up hits directly in the pocketbook.

__________
Peter Kovacs
Stewart & Irwin PC

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  • Who's in Charge?
    "I think it ironic that in the minutes of the meeting of the board of directors of the Department of Waterworks of Nov. 17, 2005, where it announced the bond issuance highlighted in your article, one of the boardââ?¬â?¢s advisers specifically stated that ââ?¬Å?debt service will not increaseââ?¬ï¿½ and specifically thanked CDR Financial for its involvement with the transaction."

    In short, there are sound ways to finance projects and their are risky ways; if the people in charge don't know the difference, they should not be in charge.

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  1. Only half a million TV Viewers? And thats an increase? I knew Indycar was struggling but I didn't know it was that bad. Hell, if NASCAR hits 5 Million viewers everyone starts freaking out saying its going down hill. It has a long way to before Indycar even hits NASCAR's bad days.

  2. IU has been talking that line for years with no real progress even with the last Dean, Dr. Brater. Why will an outsider, Dr. Hess, make a difference? With no proof of additional resources (cash in the bank), and a concrete plan to move an academic model that has been outdated for decades with a faculty complacent with tenure and inertia, I can count on IU to remain the same during the tenure of Dr. Hess. One ought to look to Purdue and Notre Dame for change and innovation. It is just too bad that both of those schools do not have their own medical school. Competition might wake up IU. My guess is, that even with those additions to our State, IU will remain in its own little world squandering our State's tax dollars. Why would any donor want to contribute to IU with its track record? What is its strategy to deal with the physician shortage for our State? New leadership will not be enough for us to expect any change.

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