Eshoo, Speier try to get back lost money

April 21, 2010 6:58:55 PM PDT
Treasury Secretary Timothy Geithner said Tuesday if he could, he would pursue compensating dozens of municipalities that lost more than $1 billion from Lehman Brothers faulty investments. That is just what two Peninsula congresswomen are pushing for -- a federal bailout to help their districts.

San Mateo County had an investment pool with Lehman Brothers. The local school district, the transportation authority, the city and county of San Mateo -- they were all invested in that pool to the tune of $155 million. And when Lehman went bankrupt they lost it all.

The assistant superintendent of the Sequoia Union High School District in Redwood City lost a little over $6 million, $4.5 million from its building fund. But it has yet cost them a building.

"It could very well be that we'll still accomplish all the building that we'll have on our list," district spokesperson James Lianides said.

Lianides says a drop in construction prices has help keep projects going forward.

The transportation authority lost $25 million, much of it earmarked to electrify Caltrain, which is still on track.

"The $25 million that we lost has pretty much mitigated the positive effects that we received from the economic stimulus," spokesperson Seamus Murphy said.

And the county of San Mateo lost close to $100 million, but so far not much has been cut.

"What it meant was we had to use almost $100 million of our reserves to run programs like this hospital and the clinics," Supervisor Carole Groom said.

In each of those three cases the agencies have coped with their losses, but on Capitol Hill Tuesday Rep. Jackie Speier, D-Calif., told the former head of Lehman there have been tangible consequences.

"Tens of thousands of people in my district are out of work have lost the opportunity to build classrooms," she said.

Speier and Palo Alto Rep. Anna Eshoo, D-Calif., want the federal government to make good on the Lehman losses.

But ABC7's political analyst doesn't think it's likely.

"However aggrieved San Mateo may feel they're not going to get anywhere unless they have support from the Congress; I just don't see it for this particular bill," Bruce Cain said.

The Democratic chairman of the House Financial Services Committee reinforced that perception.

"To the counties and other local governments ? your're not a sophisticated financial institution and the answer is don't try to invest like one either, I think a little prudence going forward on the investment side would be helpful," Rep. Barney Frank said.

But Eshoo and Speier argue Lehman was reputed to be as safe as they come.


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