Chicago and Illinois have given so much to the nation: Rod Blagojevich, the Daley machine, Jesse Jackson (Sr. and Jr.), Rahm Emanuel, Deval Patrick, and, of course, Barack Obama.
Really, Illinois, you shouldn’t have.
For years, Illinois officials misled investors and shortchanged the state pension system, leaving future generations of taxpayers to foot the bill, U.S. securities regulators allege.
The Securities and Exchange Commission on Monday charged Illinois with securities fraud, marking only the second time the agency has filed civil-fraud charges against a state.
But the agency and the state also announced that a settlement had already been reached in which Illinois won’t pay a penalty or admit wrongdoing.
Perish the thought! Just because they duped investors and shortchanged the pension system, why should anyone do time?
Because while what they did was reckless, dishonest, and worthy of tarring and feathering, it wasn’t technically illegal.
[N]o matter how harmful the pension practices were to the state’s finances, SEC officials say they could only pursue charges against Illinois for what it failed to tell bond investors, who bought bonds worth $2.2 billion.
Most states comply with governmental accounting standards, which “Illinois did not follow,” Elaine Greenberg, head of the SEC’s municipal securities and public pensions unit, said in an interview. “But the SEC cannot order a state to follow any particularly methodology.”
With this result:
Aggie and Buck were discussing in the comments what role the nanny state should play in our lives. We accept that there’s a law requiring you to wear a helmet when riding a motorcycle, in part because the state doesn’t want to have to be responsible for decades of your persistent vegetative state. Yet most of us balk at banning foods on the basis of health. We want to make our own decisions. There’s a line between what’s acceptable government interference and what isn’t. For Bloomberg that line is in one place, for me it’s in another.
I bring this up because if the federal government (i.e. the nation’s taxpayers) is in any way responsible for Illinois’ debts, we should have a say in its policies. Illinois is in the equivalent of a persistent vegetative state by acting foolishly and recklessly. I don’t want to spend a cent caring for it. Ditto Detroit, ditto California. They knew what they were doing. States, like banks, can’t be too big to fail, so fail they must.