WASHINGTON -- Rep. Henry Gonzalez, chairman of the House Banking Committee, has urged Texas Gov. Ann Richards to warn the state's universities, pension funds and other public institutions about the potential risks of derivatives.
"Over the past year, many socalled sophisticated investors have lost hundreds of millions of dollars in soured derivatives investments," the Texas Democrat told Richards in a recent letter.
Because the state's public institutions "are sustained by monies collected from hard-working Texas taxpayers, it is imperative that the managers running these institutions be warned about the risks posed by derivatives investments," Gonzalez said.
Gonzalez's letter appeared to be prompted by the huge derivatives-related losses suffered by Odessa Junior College in Texas.
"I was saddened to learn that Texas' own Odessa Junior College District had its credit rating lowered after it was uncovered that the college had lost millions investing in mortgage-backed derivatives," he told Richards.