The recently disclosed scandals surrounding the municipal bond industry have captured headlines in almost every major newspaper in New England.
The state of Massachusetts and several of its authorities are revamping and reviewing their underwriting teams and financial advisers.
But in Connecticut, finance and borrowing officials have had a pretty good summer.
As more and more states are changing their borrowing practices, the Constitution State is basking in the glow of a bond sale that may have bestowed on taxpayers more than $100 million in present-value savings.
This summer, under the leadership of state treasurer Joseph M. Suggs, the state sold the first of three offerings that will total about $800 million to bail out the state's bankrupt unemployment benefits pool.
In February, Suggs succeeded Francisco L. Borges, who left the Treasurer's offeice to become managing director of the municipal department at the Financial Guaranty Insurance Corp.
Suggs, 53, has been involved in government and financial planning for most of his adult life. After graduating from the University of Hartford, he was elected to the Bloomfield Town Council and Later served on its Zoning Commission.
In 1989, he became the first African-American mayor of a Hartford suburb when he was elected the mayor of Bloomfield.
He has been involved in the civic groups including the Black Parents for Quality Education, the Governor's Commission on Quality and Integrated Education, and the Greater Hartford Chamber of Commerce.
Suggs retired from the Monsanto Corp. this April after 27 years of service. This summer,Suggs was chosen to address the National Association of State Treasurers in Couer D'Alene, Idaho, on the responsibilities of state treasurers to minority- and women-owned firms.
In an interview with staff reporter Patrick M. Fitzgibbons, Suggs discussed his views on minority firms, Connecticut's economy, and his relationship with Gov. Lowell P. Weicker.
Q: What responsibilities do state treasures in promoting minority-owned and woman-owned firms in their bond syndicates?
A: Connecticut is dedicated to including minority-owned firms and female-owned firms in its underwriting syndicates. And I think there are very good reasons for that. First of all, that was not always the case in Connecticut. Back in 1988, or at least prior to 1988, legislation did not permit negotiated sales.
As a result, we were unable to do, for example, variable-rate issues where you need the cooperation of the syndicate.
Adding newer firms increased the competition among underwriters: it provided the state with a larger pool of firms from which to select their underwriting, teams; and it enabled the state to put together an underwriting team that best fit the issue.
Secondly, it provided minorities and women with the opportunity to enter into a business that they had been basically locked out of.
But, we expect them to bring value to the team and to the syndicate just as we expect any other firm to bring value. We are increasing the pool of talent from which we will be able to select on future issues.
Q: Gov. Jim Florio of New Jersey has suggested more competitive sales. Is that something that you would like to see?
A: Negotiated sales have worked very well for Connecticut.
Since I've been on board we have had the largest bond sale that has ever been approved by our bonding commission and the second largest issue in history in our Connecticut unemployment benefits bond sale.
If we were limited to only competitive sales, we would not have been able to do that bond issue.
It worked well for us. We were able to put together an underwriting team that met the unique needs of that particular issue. We were able to do it in a timely fashion, because this entire issue had to be completed before September of this year in order for us to really accrue the savings.
We have not seen or experienced the kinds of things that have occurred in New Jersey and Massachusetts. Obviously, we are aware of it and we certainly will follow it with interest and certainly have practices and safeguards in place to be sure that similar kinds of things don't happen here.
But, I don't think that those things are inherent in negotiated sales. They are individual circumstances that arise because someone used poor judgment or an individual exceeded what was required in a different situation. I don't think that they necessarily go along with negotiated sales.
Q: one of the things you discussed in Idaho was the economically targeted investments. Is that something that should play a major role in the treasurer's duties?
A: That term is often confused and misunderstood and for those who are not supportive of that concept, they define it as a social do-good project, using pension funds to do only social good.
I quite frankly believe that the pension resources of the state of Connecticut, for example, can be invested in economically targeted programs that, number one, are safe. and will generate a market rate of return at the same time.
I don't see it necessarily as a social do-good program, although if there is social good that comes out of it, that's fine.
But first and foremost we require of any program that we evaluate that we do get a market rate of return for our investment.
Q: Expanding Commercial's job picture and economy seems to be number one in both this office and in Gov. Lowell P. Weicker's. What are some challenges ahead?
A: Well, I think one of the challenges is coming to grips with the decline in employment, particularly in the defense area, which was a key economic area for the state.
[We need to be] assisting those very skilled and talented people in cross-training and retraining, and using their knowledge and skills in other areas including robotics design and construction.
We really do have a very highly-skilled labor pool here in Connecticut. Unfortunately, it was focused and directed toward building jet engines, helicopters, and submarines, and we're going to have to come to the realization that that is not going to be the growth area for employment in the future for Connecticut and deal with that.
Q: Is the state able to afford that?
A: I don't think the state can afford not to do it.
We have to redefine our economy. It will no longer be a financial-based, insurance-based, defense-based economy, and we have to re-define that, and that's going to take money. I think it's critical and essential that we move forward.
Q: What's your impression of the state's financial shape now?
A: Well, it's certainly improving.
We have just recently passed the first balanced biennial budget in a number of years in the state. There was no extended session and no need to call the legislature back into session. So I think that's a positive sign.
As far as I can tell from talking to economists across the state, employment is beginning to stabilize. We are not seeing the continued trend in loss of jobs.
We're not seeing a dramatic increase, but the fact that it is stabilizing is certainly reassuring. We seem to be preparing ourselves for economic growth.
Q: How is your relationship with the Governor's office?
A: We have a good relationship. We have worked very closely on a number of issues. We are currently working on identifying a way to secure the Hartford Civic Center so the Whaler Hockey Team will remain a viable entity in Hartford.
We have talked on a number of occasions about the prospects of having the New England Patriots come to the state.
If Boston and Massachusetts don't build them a new stadium, we talked about how we might go about financing the construction of a stadium. Most of that financing would come out of this office.
Q: What's your impression of the course that Weicker took after he was elected Governor?
A: At that time the state was not in a particularly good economic condition. He had a difficult challenge in front of him.
The prospect of an income tax had been raised before, and there just was not support for that, even though it did provide a much more stable source of revenue from the state.
He took a very difficult position in advocating an income tax and then lobbying sufficient support from the legislature to get that passed. So you might even call it a courageous step in hindsight.
People now are beginning to recognize what a difficult task he had before him and what a job it was to get that sort of legislation through.
Q: New England states sometimes get champed together as one unit. Is that a benefit a problem for states?
A: Well, I think sometimes it paints an unclear picture of the actual condition of the state.
When you get lumped together and people have a distorted view of the area, I don't think that's particularly helpful, and sometimes it's hard to get the facts out. While New England as a region is not doing particularly well, there are areas, like Connecticut, that are beginning to come out of this recession.
Q; What's your impression of this position of treasurer?
A: Well, I certainly enjoy it. It's a great job.
I anticipated that it would be busy, just based on conversations that I had with my predecessor and others, but I don't think anyone anticipated the market movement the way it's been over the past several months. As a result of that, not only are we doing issues that had been scheduled, but we are doing all of these refundings on top of that.
The unemployment bond sale was the largest in the history of the store, and having to do that, in addition to all of these unscheduled refundings, was perhaps a little bit more activity than I really anticipated. Because of the great staff that we have, we were able to get all of those issues completed quickly.
Q: How long does your term last?
A: I'll be running for re-election in November of 1994. It's a four-year term and I'm still in the unexpired term of my predecessor.
Q: How did your predecessor help you get ready?
A: Frank [Francisco L. Borges] and I talked a number of times before the legislature even engaged in the process of appointing me for this, and I told him of my interest.
We talked about the Treasury and some of the functions of the Treasury, not only the direct responsibilities of debt management and investment, but also the responsibilities of sitting on some of the quasi-governmental agencies, like being a member Connecticut Development Authority.
After I was appointed by the legislature, he and I met several times to go over in detail what the responsibilities were and what the timing of some of the upcoming issues would be.
He had prepared his staff to brief me on all of their particular areas and had prepared a transition booklet which basically outlined all of the functions of the treasury, the history of the treasury. I'm really indebted to him for helping me in this transition period.