Securitizing the Tobacco Settlement Money

The tobacco settlement was not "a crushing blow to Big Tobacco," or "a victory for David over Goliath." It was conspiracy, fraud and racketeering by Big Health Fascism against the innocent smokers of America. Ring-led by the Puritan Rev. George Trask's family connections to Yale University and Skull & Bones in particular, the anti-smokers took over the tobacco companies a hundred years ago and have controlled them ever since. The conspirators created the American Cancer Society, American Heart Association, and even the Harvard School of Public Health, as a gallery of puppets to create the federal health establishment of the National Cancer Instittute and National Institutes of Health, and use our tax dollars to control research and manufacture junk science, based on deliberately using defective studies to falsely blame smoking for diseases that are actually caused by infection. The tobacco lawsuits, which were all founded on the Hitler-magnitude Big Lie that smoking is an economic burden to society, is just another example of the total political corruption of our system by this rotten crypto-religious clique!

"Investment banks, in particular, love tobacco bonds. Because they are more complex than standard debt offerings, they offer steeper commissions. In 2007, when Ohio traded its future payments for an immediate payout of about $5 billion, it paid brokers $30 million. During the dot-com bust, when initial public offerings all but vanished from Wall Street, tobacco bond offerings filled the void for companies like Bear Stearns, nearly doubling from around $7 billion in 2002 to nearly $13 billion in 2003. From the beginning, Bear Stearns was at the forefront of tobacco bond sales, and ultimately brokered about half of them before it was sold off to JPMorgan Chase."

About 25 states have issued bonds based on their future tobacco settlement payments. In California, New York, Ohio and Wisconsin, the money destined for state coffers in 2010, 2015 and 2025 has already been spent. "Oppenheimer’s Rochester family offers 18 different bond funds, some of which have as much as 20 percent of their assets invested in tobacco bonds, according to fund manager Daniel Loughran. The Rochester funds, while among the most aggressive investors in tobacco bonds, are hardly unique. A review of 660 leading bond funds covered by the investment research firm Morningstar Inc., conducted at msnbc.com's request, showed that more than 260 are invested in tobacco bonds." (Ten Years Later, Tobacco Deal Going Up in Smoke. By Bob Sullivan. The Red Tape Chronicals, Nov. 21, 2008.) As always, these anti-smokers' patsies who comment upon the subject never object to the scientific fraud (which they swallow hook, line and sinker and regurgitate in our faces), or the economic Big Lie (likewise), or the anti-smokers' censorship of the media (of which they are beneficiaries), or their polical corruption - no, the only things that matter to these little whores pretending to be critics is that it gives the state governments a financial stake in continued smoking, and that the states don't spend enough money persecuting smokers.

Colorado

"If Colorado securitizes its tobacco settlement, New York heavyweights Solomon [sic] Smith Barney, Morgan Stanley Dean Witter and Goldman Sachs would almost certainly emerge as front-runners to broker the deal, not a Denver firm, said Blackwood, of Bigelow & Co. 'This will be a New York deal,' he said. 'This deal is so large, none of the regionals are positioned to do a deal like that. A firm like ours... there is no way we are going to solo manage on a deal that size.'

"The investment banking industry has been lobbying state treasurers nationwide since mid-1999 on the potential benefits of securitizing tobacco settlement money, sponsoring educational conferences and mailing reams of literature on tax-free bond sales. 'Taking advice from people who have an interest like that is not that great a move,' said Steven Murphy, managing director of Standard & Poor's public finance department." Colorado weighs tobacco windfall by Marsha Austin, staff reporter, Denver Business Journal, 2000 Feb. 18.

But in the end, who cares - it's FREE MONEY anyway, because it was stolen!

Actually, according to Charles Gasparino of The Wall Street Journal, the investment bankers began their lobbying for securitization in early 1999 ("States Get Pitch on Street: Sell 'Tobacco Bonds,'" Wall Street Journal 1999 Mar. 1, p C1.

New York City

"Tobacco Settlement Asset Securitization Corporation announces underwriting team," New York City Comptroller's Office press release, 1999 Mar. 5. "The senior managing underwriters for TSASC's Tobacco Settlement bonds will be Bear Stearns & Co. Inc., J.P. Morgan & Co. and Salomon Smith Barney, with Salomon Smith Barney appointed as book-running senior manager for the initial bond issue, which is expected to occur in July 1999. The initial firms selected to be senior co-managers are Morgan Stanley Dean Witter, Goldman, Sachs & Co. and Paine Webber Inc."

Wisconsin

The company that sold Wisconsin's secuitization bonds, "Bear Stearns has enjoyed a preponderance of bond underwriting of negotiated state of Wisconsin debt issues over the past eight years that Thompson has been governor. From 1987 to 1994, the firm has been the senior manager on 25 deals, totaling more than $2 billion, according to Securities Data Co. Public finance executives familiar with the municipal bond business in Wisconsin said they had the impression that Hurtgen and Klauser were intimately involved in picking firms for underwriting assignments. 'My impression was that (Hurtgen) was actively involved as an assistant to his boss and Klauser made the decisions,' a public finance executive said. Another Chicago-based investment banker said, 'We definitely went in and saw (Hurtgen) and treated him as if he was a decision maker.' According to state officials, Klauser and Hurtgen have sat on state boards, commissions, and committees charged with selecting or approving securities firms for state business. And Lightbourn said that Klauser, who could not be reached for comment yesterday, participates in the selection process. Bear Stearns is also active with the Wisconsin Investment Board, for which it has been a broker since at least 1987. Last year, the firm was paid $1.18 million in base commissions for its work with the board. Klauser is a member of the investment board, according to Lightbourn." "[Senior managing director of Bear Stearns' Chicago office Peter B.] Fox's brother, William Bruce Fox, held a salaried position on Thompson's 1994 reelection campaign, according to campaign documents acquired by The Bond Buyer." (Bear Stearns gets Wisconsin deal; governor's office denies influence. By Karen Pierog and Cris Carmody. The Bond Buyer, Mar. 31, 1995.)

"When Bear Stearns & Co. landed a no-bid contract to underwrite a $147 million stadium bond issue for Miller Park - collecting more than $1.8 million in fees - it prompted criticism of ties between the securities firm and the Thompson administration. Among the firm's executives were Nicholas Hurtgen, a top aide and fund raising advisor to Gov. Tommy Thompson who was hired in 1995 to work for Bear Stearns public finance department in Chicago. Peter Fox, a Bear Stearns executive, was also a key Thompson fund-raiser in Chicago. In 1997, concerns about potential tampering on no-bid state bond issues prompted an audit by the Legislative Audit Bureau. State Rep. Spencer Black, D-Madison, requested the audit after reports linked former Thompson Secretary of Administration James Klauser and campaign contributions from Wall Street bond firms doing business with the state. The audit found Merrill Lynch and Bear Stearns sold more than half of the $440 million in state bonds issued through negotiated agreements.

"To date, 15 governments have converted all or portions of their tobacco settlements. New York City was the first to do so, securitizing $709 million to pay for capital school projects. South Carolina has done the largest deal to date, $934 million, which would be passed by Wisconsin's $1.3 billion plan. Not all the states are expected to convert their settlements, however. In Colorado, for example, the Legislature rejected a proposal to move forward with a securitization." (Tobacco deal's next winner. Hand-picked broker to get $12M fee. By Mike Ivey, The Capital Times (Madison WI), 2001 June 7.) Hurtgen, who was convicted on federal charges in Illinois over hospital kickbacks, is the brother-in-law of Philip Morris lobbyist Phil Prange, whose wife, Alison, is Wisconsin government relations director for the American Cancer Society.

"The three-person board overseeing the state's record $1.7 billion dollar tobacco bond deal is rather awkwardly called the Badger Tobacco Asset Securitization Corp. May we suggest a less cumbersome and more apt name for this panel - say, All in the Family? Just last week, Gov. Scott McCallum's administration named Madison wheeler-dealer John Petersen III to the board, which was set up to sell the bonds. On Monday, it then ratified the choice of Bear Stearns & Co. Inc., a firm that just so happens to employ Petersen's son, Eric. Eric Petersen's $18,000-a-year consulting job, according to records, is to survey and identify on behalf of Bear Stearns potential markets for client's bond sales and governmental financing services in the state of Wisconsin. In other words, drum up state government business for Bear Stearns, a company with a stranglehold on Wisconsin's bond business." Petersen's partner, William McCoshen, lobbies for Northwestern Mutual, the parent company of Robert W. Baird & Co. Inc., the Milwaukee securities firm that will also be one of the lead underwriters in the deal. And Petersen himself once worked for Bear Stearns in New York. "Throughout most of the Thompson administration, now deceased super-lobbyist Jim Wimmer carried water for Bear Stearns in Madison. Wimmer, who died in 1998, was Eric Petersen's partner and mentor. It appears that Petersen, who purchased Wimmer's business, assumed the Bear Stearns contract three years ago. Just how close are these relationships? The elder Petersen was the executor of Wimmer's estate." Fritz Ruf was also a member of the board. (Everything relative with tobacco panel. By Cary Spivak & Dan Bice. Milwaukee Journal Sentinel, Apr. 25, 2002.)

"Bear, Stearns and Company Attn: Peter B. Fox, 3 First National Plaza, Chicago, Illinois 60602, (312) 580-4000 Subjects: any function or activity of any branch, department or phase of federal, state or local government; agriculture, outdoors or environment; taxation; regulation of business, finance or insurance, or other topics pertaining to the general public health or welfare. Wimmer, James W., Jr. " (Period ending May 5, 1990. Alphabetical Index by Name to Lobbyists' Principals. Dec. 29, 1989.)

"Abstract Peter B. Fox, a native of Champaign, Illinois, is a Senior Managing Director of Bear Steams & Company where is oversees the firm's public finance activities. Fields Named Organization American Cancer Society Department of Commerce (DOC) Stanford University University of Illinois (at Champaign-Urbana) Wendy's (Fast Food) Named Person Fox, Peter B. Date Loaded 16 Mar 2005 Box 8062 Page 1: TI31262179 This file has been removed"

Who lobbies on Wisconsin Tobacco Settlement Securitization? American Cancer Society 56 hours; Wisconsin Academy of Family Physicians 15 hours; Smoke Free Wisconsin 13 hours; Campaign for Tobacco-Free Kids 4 hours. (Lobbying Effort by Budget Bill Subject. Tobacco Settlement Securitization. Wisconsin Ethics Board, as of Monday, September 03, 2007.)

Jurisdictions Which Have Securitized Tobacco Settlement Funds ($ in Millions)

From the Legislative Fiscal Bureau Paper #885, "Discussion of Tobacco Securitization (Tobacco Settlement Securitization, 2001 April 26.

New York City: 11/99, $709.0M; Capital funding / schools

Nassau Co. (NY): 11/99, $294.0M; Health care / general expenses (deficits)

Westchester Co. (NY): 12/99, $103.0M; Advance payment of hospital debt

Tulare Co. (CA): 12/99, $45.0M; Establish endowment for general expenses

North Dakota: 3/00, $32.1M; Water resource projects

Monroe Co. (NY): 8/00, $163.0M; Refunding debt / capital projects

Erie Co. (NY): 9/00, $246.0M; Economic development / county expenses

Alabama: 9/00, $50.0M; Capitol projects / economic development

Chautauqua Co. (NY): 9/00, $30.0M; Capital projects / debt defeasance

State of Alaska: 10/00, $115.0M; School construction / renovation

Puerto Rico: 10/00, $409.0M; Capital projects and equipment

Niagara Co. (NY): 10/00, $48.0M; Refunding debt / capital projects

NY Co. Tobacco Trust: 11/00, $239.0M; Refunding debt / capital projects

Washington DC: 2/01, $525.0M; Refunding debt / capital projects

South Carolina: 3/01, $934.0M; Capital projects / health care / econ. development

Alaska

Proposed offering, expected sale date Oct. 12, 2000, Northern Tobacco Securitization Corporation, Tobacco Settlement Asset-Backed Bonds. Bear, Stearns & Co.; Morgan Stanley Dean Witter; Lehman Brothers; Salomon Smith Barney; Merrill Lynch & Co.; First Union Securities; PaineWebber Inc.; Wedbush Morgan Securities Inc.; Ragen Mackenzie Inc.; Charles Schwab & Co.; Edward Jones.

cast 02-16-10