San Mateo wants bailout after Lehman fall

May 5, 2009 7:19:27 PM PDT
San Mateo County officials are on Capitol Hill fighting to get money from Congress to make up for the tens of millions the county lost when Lehman Brothers went bankrupt.

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Bay Area Congresswomen Jackie Speier and Anna Eshoo led the San Mateo delegation.

They told the House Financial Services Committee that when Lehman Brothers collapsed, San Mateo County lost $155 million taxpayer dollars.

Nationally, local and state governments lost a combined $1.7 billion.

"So much of our taxpayer money and bailout money has gone to AIG and private jurisdictions. I am asking that taxpayer money go to taxpayers," said Sen. Speier (D) San Mateo.

San Mateo County schools, including the Community College System will suffer as a result along with medical services, police and fire.

The delegation wants some of the $700 billion in TARP bill money aimed at helping banks.

"One of the purposes of TARP is to help local governments, those hurt by allowing Lehman to collapse. TARP has helped private industry. It should also help local communities," said San Mateo County Supervisor Richard Gordon.

San Mateo says it invested in Lehman Brothers as a secure way to protect principal, not make wild profits. The average return over the last 5 years was 3.7 percent.

San Mateo Community College Chancellor Ron Galatolo says the financial hit is made worse by state budget cuts.

"When our Lehman instruments became worthless, they essentially wiped out our operating reserves, subsequently when the state wiped out our operating revenue w had no viable option but to reduce teachers and support staff, also elimination of prorgams and services," said Ron Galatolo.

An economist hired by the county says according to his analysis, the Lehman losses will cost the county more than 1,600 jobs, $216 million in economic output and 100-million is worker income.

"These losses are intensifying already grim economic situation in the state of California. Unemployment in San Mateo County has risen from under four percent to over eight percent," said economist Chris Thronberg.

So far, Treasury Secretary Tim Geithner has ignored their requests for TARP money. The county is suing Lehman Brothers accusing executives of fraud, publically pretending the company was in good health, even when trying to prevent collapse.

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