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Lisa Madigan Sniffs an Emergency…er..uh…False Alarm.

Jim Merriner 31 December 2008 One Comment

Wow, that was close. On Thursday, Dec. 11, the New Madrid fault shifted, sleeping volcanoes rumbled, and a Texas-size asteroid veered from its orbit, heading straight to Chicago.

Four days later, the fault line settled with a quiet wheeze, the volcanoes yawned, and the asteroid mysteriously vanished. What luck!

What had changed? Attorney General Lisa Madigan signed a document which she had refused to sign four days before.

Madigan apparently was the sole official who heard apocalypse threatening early this month when the governor’s office routinely prepared an OS (offering statement) for $1.4 billion in short-term borrowing. The state treasurer, Alexi Giannoulias, and comptroller, Dan Hynes, routinely approved the OS.

Then, Gov. Blagojevich was arrested on Dec. 9. His budget director, Ginger Ostro, quickly put out word to investors: hey, we’re cool, the charges have no impact on state finances, don’t worry, buy the bonds.

The state was in a hurry to sell these bonds for cash to cover part of a humongous backlog of bills by Dec. 31. In fact, the state’s finances are so shaky that officials planned to sign the closing documents before the bonds were priced—usually it’s the other way around—to reassure the markets that Illinois would pay off the notes.

Nonetheless, the day after Blago’s perp walk, Standard & Poor’s said it was reviewing the state’s AA credit rating. This action applied only to long-term general obligation bonds, not the $1.4 billion in short-term general obligation bonds.

Attorney General Madigan reviewed the situation and concluded: It’s an emergency! Nearly the moment after Blago was arrested, she called on him to resign. Late on Dec. 10, she decided not to close on the OS scheduled for the next day. The following day, Dec. 12, she filed an emergency order asking the state supreme court to declare Blago unfit to govern.

Her petition lists 18 paragraphs under the heading, “Ability to Govern Effectively.” The only one that makes any sense from an emergency standpoint is this:

“In light of the federal complaint, Mr. Blagojevich’s ability in his official capacity to borrow money on behalf of the State is severely curtailed. A $1.4 billion short-term debt offering scheduled for December 11, 2008, appears to have been postponed because of the federal criminal charges, and Standard & Poor’s Ratings Service has stated that it may downgrade the State’s general bond rating in part because of the legal charges Mr. Blagojevich faces.”

That’s an emergency? By Madigan’s telling, it was so dire that the public could not await the impeachment process. The court had to do the legislature’s job and oust the governor at once.

Both Madigan and, later, Giannoulias said she had been “forced to delay” the OS in the name of fiscal prudence. The newspapers took this language at face value and repeated it. I can remember when newspapers had reporters.

Madigan had said she could not certify the bond documents because of a clause holding that there were no pending legal actions against state officials that could affect borrowing. On Dec. 15, she slightly altered that language and signed it. The OS went out on Dec. 16.

Giannoulias said the five-day delay would cost taxpayers an extra $20.8 million in interest costs because investors had grown more skittish in the interim. The media tended to blame Blago for this. For all the manifold sins of Rod Blagojevich, of this charge he is innocent. He is not the one who played politics with that $1.4 billion.

Something else also changed during that interim. The attorney general’s father, Speaker Mike Madigan, decided to go ahead with impeachment, naming a House committee on Dec. 15. Apparently he thought Lisa’s motion asking the supreme court to get rid of Blago for him had little chance. If so, he was right. The court rejected it without comment on Dec. 17.

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Jim Merriner, a former city editor and political editor for both the “Sun-Times” and “Atlanta Constitution” is a regular columnist for The Chicago Daily Observer.

One Comment »

  • Pat Hickey (author) said:

    Jim,

    Happy New Year! This is some damn fine prose.

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