Volume 4 Number 44
November 2, 2007

After meeting with Wall Street executives, Sink orders analysis of Treasury funds

After meeting with senior executives from several Wall Street investment management firms in New York City last week, Florida Chief Financial Officer Alex Sink called for an in-depth analysis of the state’s Treasury investments. Sink’s goal is to further assess the amount of risk in the state’s investment portfolios, specifically related to mortgage-backed securities as well as other investments which may be affected by the collapse of the subprime mortgage market.

Investment managers who manage state funds are required to abide by strict financial guidelines, such as investing in funds with specific credit ratings and other risk criteria. In some cases, high-risk mortgage-backed securities have been repackaged, given a high investment grade rating, and sold to investors. With Moody’s Investors Service and other rating firms downgrading the ratings of several mortgage-backed securities previously rated as high as AAA, CFO Sink is seeking to gauge the quality of the state’s investments.

“As the manager of the state Treasury with $20 billion in tax dollars, I want to ensure we are safeguarding the taxpayers’ money,” said CFO Sink, who oversees the Department of Financial Services. “I have ordered a thorough review of the state Treasury’s investments to uncover and identify any previously unknown risk to help us protect Floridians’ tax dollars.”

Sink also called on the State Board of Administration to review the investments of Florida’s $140 billion pension fund, and prepare to present the findings to the Florida Cabinet’s meeting on November 14, 2007. Additionally, Sink is encouraging other state entities – including the Florida Hurricane Catastrophe Fund, Florida Citizens Property Insurance Corporation, and the Florida Prepaid College Fund – to review their asset allocations, investment decisions and risk levels.