Mellow Seeks Recovery of State Money Lost in Credit Crisis
State Senate Democratic Leader Bob Mellow is asking Pennsylvania State Treasurer Rob McCord for a full inquiry that includes possible legal action to recover more than $130 million in state funds lost as a result a securities lending arrangement gone awry.
Pennsylvania lost $133 million as a result of Mellon Bank N.A. exposing taxpayer funds to asset-backed securities issued by Sigma Financial. Sigma Financial—an investment company managed by a London-based manager—collapsed last September amid the credit crisis.
Mellow says the loss of these funds has had a deep and significant impact on key investment funds. Millions of dollars have been lost from the State Worker’s Insurance Fund (SWIF) that benefits businesses, the tuition account program for college students, as well as the Tobacco Settlement Fund that pays for numerous health care initiatives. As a result, he says, a significant imbalance between assets and liabilities now exists.
Pennsylvania lost $133 million as a result of Mellon Bank N.A. exposing taxpayer funds to asset-backed securities issued by Sigma Financial. Sigma Financial—an investment company managed by a London-based manager—collapsed last September amid the credit crisis.
Mellow says the loss of these funds has had a deep and significant impact on key investment funds. Millions of dollars have been lost from the State Worker’s Insurance Fund (SWIF) that benefits businesses, the tuition account program for college students, as well as the Tobacco Settlement Fund that pays for numerous health care initiatives. As a result, he says, a significant imbalance between assets and liabilities now exists.
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