See no evil: CABS and media

By Joel Thurtell

Thanks to Kevin Dayton of the Dayton Public Policy Institute for noticing my recent columns about the evils of Capital Appreciation Bonds.

He covered the May 11, 2012 meeting of California’s League of Bond Oversight Committees annual conference in Sacramento, where there was a presentation featuring bad news CABs.

As near as I can tell, he’s a one-man think tank who goes to public meetings when he thinks important matters will be discussed without REAL media coverage.

Like me, he’s a blogger. We don’t have fancy business cards with the logo of some newspaper chain embossed beside our names. But we have eyes, ears and brains.

Dayton points out correctly that municipal bonds are not an exciting topic. Where news reporters are concerned, a crime story will trump a school finance story for eye-dazzling, paper-selling headlines.

A friend sent links to my blog columns on CABs to California media outlets, including the Los Angeles Times.

I’m not holding my breath.

There are other reasons besides lack of sex appeal why news people ignore stories about government finance.

Financial stories are a lot more complicated and require more commitment of attention and intelligence than the homicides and petty scandals that keep news people busy.

Still, you’d think reporters would wise up. Don’t they have a sense of public service?

What can be right about gouging property owners for interest compounded to hundreds or even thousands of percent?

Well, there is this other matter. About the movers and the shakers.

The problem with news media is that all too often they see their role in the community as being boosters.

If a town’s leading citizens, such as school board members and administrators, endorse something, it must be okay.

And if it’s not okay, who are they to blow the whistle on their comrades in the Lions, Kiwanis, Rotary or other social networking organizations they belong to?

So much for establishment reflex.

News editors like to think of themselves as members of the elite.

It is not surprising that newspapers often get behind school bond proposals.

That was the case in Michigan in the late 1980s and early 1990s when CABs were being issued by dozens of school districts. In four years, Michigan school debt doubled from $2 billion to $4 billion and was headed for the stars.

Until CABs were outlawed.

CABs were banned in Michigan as a direct result of my reporting on them in the Detroit Free Press. They simply could not stand the light of day.

Now, look at California, where the Poway Unified School District last year sold $105 million of bonds that will require repayment of nearly $1 billion in interest ending in 2051.

Did local news people sniff around and smell something tainted with that bond proposal?

Some citizens raised objections to the bonds, but the┬áSan Diego Union-Tribune editorialized for the 2008 proposal, repeating the “no new taxes” mantra they acquired from school officials.

It was a lie, but hey! Be cool, news people. Support schools!

Sad to say, in this case, backing school policy means voters get screwed.

True support of Poway schools would have meant denouncing the proposal as a fraud.

California schools have issued more than 1,000 CABs since 2000. They are bad, bad news. Nary a peep from the press.

The word is getting out.

Joelontheroad.

Kevin Dayton.

Wonder when — if ever — the REAL media will speak up?

 

 

 

 

 

 

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