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Louisville could lose $44,000 in investments
Louisville could lose as much as $44,000 in investments that were made with Lehman Brothers, the huge Wall Street investment bank that filed for bankruptcy last month, City Manager Malcolm Fleming told the City Council at a budget meeting Wednesday.
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The city participated with Colorado Diversified Trust, a state money market account that allowed 65 local governments to pool their money for short-term investments and maintain liquidity. One of the investments made by the trust was $5 million in commercial paper from Lehman Brothers.
Louisville used the Colorado Diversified Trust as a "sweep" account for the city's general operations account at First National Bank. A sweep account is a money holding account that allows the city to invest its daily balance overnight at a higher interest rate than what's offered by the bank.
All assets in the Colorado Diversified Trust have since been transferred to a similar fund called ColoTrust.
Boulder County was also invested in Colorado Diversified Trust and could lose $601,000.
The exact amount of losses depends on a yet-to-be determined Lehman Brothers bankruptcy plan.
Posted by runcatalina on October 1, 2008 at 10:28 p.m. (Suggest removal)
Sorry but BFD. I know individuals who have lost alot more than that. $44,000 is comparatively nothing.
Posted by sidd on October 2, 2008 at 6 a.m. (Suggest removal)
Hmm they have enough to play the stock market but not enough to pay for their library books?
Posted by JakPott on October 2, 2008 at 8:56 a.m. (Suggest removal)
I contend governments shouldnt be 'investing' taxpayer money in a fund with risk.
Posted by JL_in_Louisville on October 2, 2008 at 11:25 a.m. (Suggest removal)
Jak, Stalin, sidd, you all miss the point.
Any city, state, whatever that has working capital on their hands needs to get a decent rate of return on it so it doesn't lose value to inflation. Commercial paper is usually a safe way to do that. As with anything, there is some risk, but a whole lot less than in the stock market (Econ 101 for Stalin and sidd: commercial debt is not the same thing as the stock market).
sidd please learn a little about finance in a small city government. I'm sure the city holds a variety of bank and other commercial paper at any one time but it's not like every last dollar should or even can be weighed against someone's pet project. It's there for small and medium size needs that come up irregularly. (This has nothing to do with you "superior people" not having enough of a civic identity to build yourselves a library, so you try to mooch off of Louisville's library forever. Although, it doesn't look like you personally are making good use of the books.)
Runcat, wilson, syn, Adam, hats off, you have got it right.
And, yeah, WTF is a 3 line nut graph? The Camera is taking lessons from the guy/girl that consistently screws up the captions on CBS 4.
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