State funds have $1.5B in troubled mortgage-backed investmentsAs Florida tries to restore calm to the state's investments for local governments, the same troubled securities lurk in the state's own funds, particularly those used to pay hurricane claims.
A review of public records show both Citizens Property Insurance and the Florida Hurricane Catastrophe Fund have another $1.5 billion in troubled mortgage-backed investments managed for them by the state, under names like Countrywide and Citigroup.
Cat Fund Director Jack Nicholson said he is reassured those hapless holdings will be gone by the time Florida is back in hurricane season next May and has a potential need for quick cash.
Meanwhile, Citizens is taking a beating from lawmakers for allowing so much — $1.5 billion to become trapped in the state-managed investment pool that had to be shut down last month.
Citizens, which insures 1.3 million Florida homes, did not participate in the mass withdrawals last month that closed Florida's Local Government Investment Pool.
The result is that Citizens shares the fate of hundreds of local government entities that cannot make further withdrawals without paying penalties.
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The SBA reports 11 percent of those other state-managed holdings for Citizens include securities downgraded or in default. The insurer had not, by Friday, released a similar account of another $4 billion that is privately managed.
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And the overseer of the state's retirement pool — Department of Management Services Secretary Linda South — has asked the SBA for a similar accounting of the risk to Florida's $138 billion pension fund.
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Friday saw another $44.8 million in withdrawals from the capped local government investment pool, and deposits at $21 million — leaving just more than $10 billion by close of Friday. Because of withdrawal limits, the balance is unlikely to go much lower.