Monday, June 15, 2009

From the Standard & Poor's letter...you don't say....

Supervisor Reed's Guest Editorial in Sunday's Observer Dispatch - New Hartford has charted course for its financial recovery made reference to a February 2009 letter from Standard & Poor's:
...in February 2009 Standard and Poor’s, a bond rating agency, stated, “The stable outlook reflects our expectation that the town will maintain reserve levels that are commensurate with the rating category."
True, that sentence was part of the letter, but that's not all that Standard & Poor's had to say.

First some background. The terms and conditions of the rating:
Standard & Poor's issues public finance ratings for a fee upon request from an issuer, or from an underwriter, financial advisor, investor, insurance company, or other entity, provided that the obligor and issuer (if different fromt he obligor) each has knowledge of the request.
So Standard & Poor's makes their money by charging fees for those ratings upon request...Click here to read the rest of the Terms and Conditions.

We have also obtained a copy of the Standard & Poor's letter to Ms. Fairbrother, the Town Bookkeeper who, according to the letter, was the town contact person for the request sent to Standard & Poor's:
Pursuant to your request for a Standard & Poor's rating on the above-referenced obligations, we have reviewed the information submitted to us, and subject to the enclosed Terms and Conditions, have assigned a rating of "A".
So the rating is merely based on information provided to Standard & Poor's by the town.

However, most important is the Standard & Poor's Rationale for the rating.

For now, we are going to post the rationale without comment other than to say that this blog was supposed to be posted on Sunday. However, after looking at the document we received through our FOIL, we noticed that page 2 of the rationale letter was missing.

We visited the town clerk's office today to find out where the missing page was and Supervisor Reed's secretary said it must have been a mistake; she didn't realize that page 2 was on the back of page 1 of the original document.

Pay particular attention to page 2 of the rationale document and decide whether it was an oversight or perhaps there was information that Supervisor Reed would rather was not disclosed. Was Supervisor Reed's sentence that he used in his Guest Editorial selectively chosen?

We will be commenting further on the rationale letter in a couple of days.

6 comments:

Anonymous said...

Was it this sentence Earle forgot to mention?


... Further declines in reserve levels will likely pressure
the rating downward.


Thanks Earle, Boob, Dave, Chris the Attorney CPA, and quiet as a doormouse Rich.

Inquisitor said...

So, let me get this straight. The Town is PAYING for a statement from Standard and Poors?

So the Town puts in misleading information upon which S & P renders a FAVORABLE RATING?

Sounds to me that Standard and Poor's is nothing more than a money making conduit for themselves, i.e. self-serving to themselves and towns seeking a favorable rating.

Seems to me like professional malpractice?

New Hartford, N.Y. Online said...

Inquisitor,

We don't know about malpractice, but certainly if the Rationale that Standard and Poor's wrote is based on information provided by the town, one has to question where in the Hell the town came up with that information and who in this town is responsible for providing the information to S & P.

Inquisitor said...

What part did Gerry Green and/or Frank Basile play in this?

Anonymous said...

Perhaps we should turn our attention to the accounting firm that audits the town every year....And just what firm might that be? Maybe NHNY Online can shine some light on this piece that would influence S&P. BTW isn't S&P in hot water for how they failed to properly rate the large financial firms??????

New Hartford, N.Y. Online said...

Anonymous comment 2,

Barone & Powers has been auditing the town since Earle came into office and once again they were the only firm that answered the RFP just recently put out by the town board.

The audit will cost $10,000 for the audit of 2008.

One of the problems with S & P is that they use information submitted to them by the town to give a rating. Did you notice any incorrect statements in their Rationale letter? We will be blogging soon...we are waiting for some information.