Questions Over Insurer’s Collapse
The May 25 article about the city of Simi Valley’s loss from the collapse of Executive Life raises more questions than it answers. One of the principles of investing is diversification. Why did all $15 million get placed with one company? Why won’t the credit reputation of the city of Simi Valley be tainted? Where are the $12 million from the last bond sale invested? Councilman Davis says only 10% of the issue was held by small investors and implies that a loss by a large investor will not also be harmful.
This appears to be another attempt to whitewash the actions of the politicians who should be ultimately responsible for the funds they administer. To say “nor will the takeover harm the city’s loan program for first-time buyers” is to admit that the city did not need all the money it raised in the two bond issues.
Will the investment community really give the same credit rating to the city now? If not, then the cost in higher interest to the taxpayers could really hurt the small investor, homeowner! Let’s pay more attention to how the public’s funds are invested.
RONALD ROSE
Ventura
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