[quote=CA renter]
BTW, I’m fine if you want to get rid of taxpayer backstops, but ONLY if we get rid of backstops for **everyone.** Why should bondholders or other stakeholders be backstopped if public employees are not?
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I do think we should get rid of tax payer backstops for everybody. I wasn’t in favor of the bailouts for GM, AIG, TARP or any of that nonsense. Let people that make malinvestments bear the consequences of their actions.
I haven’t really seen a case in a municipal bankruptcy where bond holders didn’t also take losses. Of course CalPRES and other big pensions probably hold a lot of those bonds so attempting to put differed compensation at the front of the bond holders probably doesn’t help you too much.
[quote=CA renter]
And since public employee pension benefits are deferred compensation (it is money the employees have already earned for services performed), we should also be able to claw back monies paid to private contractors if they don’t perform or if the public entities decides they can’t afford it, as well. Fair is fair, right? Or, do you think we should just penalize one specific group of taxpayer-backed stakeholders (who have had NOTHING AT ALL to do with the financial crisis); and if so, why?[/quote]
Usually a contract is only paid upon delivery of work that has been deemed satisfactory. I don’t think your going to find a court that will let you claw back money from a contract unless there was some sort of deception in the delivered work. Contractors aren’t going to take a contract that calls them to work for years with no payments and then get paid all at the end. They aren’t that stupid.
As for CalPRES I have no problem if they want to try to sue Wall Street for deceptive investments. They were the lead plaintiff in the Enron civil case and I believe the big investment banks settled for 6-7 billion on that case. CalPRES probably lost more than they’ll get back but they can and should try to get money back from Wall Street if it can be proven as a scam investment.
Of course with all that said we know that the only pot of money that’s big enough to pay all public sector employees in full is the tax payers.
