Work Together or Flop Together : Recent economic blows show the need for a public / private partnership
Keeping California competitive is no easy task in today’s recessionary environment. Protecting the state’s interest takes creativity and plain hard work. So it is encouraging to see the public and private sectors pitching in to solve festering problems.
Two noteworthy examples: Insurance Commissioner John Garamendi’s deal for a private company to take over the troubled Executive Life Insurance Co. of California, seized by the state in April; and a meeting held by government and labor officials on how to make up for the 2,600 jobs to be lost when General Motors shuts its Van Nuys plant next year.
State insurance regulators have been right in their dogged pursuit of a private solution to the Executive Life crisis, because California doesn’t have the money--or maybe even the authority--for a bailout.
The insurance company was taken over after its junk bond portfolio lost value and policyholders rushed to try to cash in their policies and annuities.
A French consortium has agreed to acquire Executive Life in a complex transaction valued at $3 billion. The state will take the offer unless a better one comes in before a court approves or rejects the acquisition. It’s not a done deal and could be derailed.
Nevertheless, the agreement restores some lost confidence in the insurance industry and offers the best opportunity now available for Executive Life’s 372,000 policyholders to recover most of their funds. Garamendi’s activism is a refreshing contrast with the inaction of his appointed predecessor.
Meanwhile, public officials are beginning to come together to address the GM Van Nuys plant closure. Assemblyman Richard Katz (D-Sylmar), Mayor Tom Bradley, Rep. Howard L. Berman (D-Panorama City) and others convened to try to figure out how to offset the job loss and ease the ripple effect of the closing on the regional economy. One idea: Making buses and rail cars for the $100-billion regional transit system.
What’s needed now is a deep commitment. And for political, labor and business leaders to resist the temptation to pursue their own agendas at the expense of California’s economy.
