Investments Tied To Subprime Junk May Leave Florida Pension Fund "Holding The Bag"

In Florida, Bloomberg News reported this week:

• Florida's pension fund owns more than $1 billion of the same downgraded and defaulted debt that sparked a run on a state investment pool for local governments and led officials to freeze withdrawals, according to documents obtained by Bloomberg News through an open records request.

Some of the notable quotes in the story:

• "These were highly inappropriate investments for taxpayers' money,'' said Joseph Mason, a finance professor at Drexel University in Philadelphia. "This is the tip of the iceberg for pension funds. We know the paper is sitting there. There are substantial subprime-related losses that haven't shown up yet.''

• "Garbage is garbage,'' said Harvey Pitt, former chairman of the Securities and Exchange Commission. "Once they recognize it's not fit for human consumption, they have to exercise their fiduciary obligation and get rid of it.''

For more, see Florida Pension Fund Has `Suspect' Debt Held by Pool.

Go here for related posts on how investors are being affected by investments tied to subprime mortgages, including how a Florida state-run fund recently experienced the equivalent of "a run on the bank" when municipal finance managers throughout the state started frantically pulling their cash from the fund before the state stepped in and froze the fund's assets.