Sunday, March 11, 2007

Tribune story capsulizes Blago foibles

This morning the Tribune has an important story by reporters Jodi Cohen and David Jackson that reveals Illinois Governor Rod Blagojevich is forging ahead with a controversial plan to sell $3.4 billion in state student loans.

The story perfectly symbolizes all that is wrong with Blagojevich's governance. It illustrates an attempt to sell off assets for short-term financial gain. It features a deal engineered by questionable Blagojevich insiders making lots of money. It is yet another example that bad press on an issue won't deter Blagojevich from sneaking a scheme back later under the radar screen. And it showcases the trademark Blagojevich hypocrisy: Placing middle-class students at the mercy of loan companies while preaching how much he cares about education and the middle class.

After the news media got wind of the scheme in 2005 and found all kinds of insider deals, the General Assembly blocked it. In the months since, Blagojevich simply revamped the obscure Illinois Student Assistance Commission and went forward anyway.

And to head the effort, Blagojevich quietly picked a big fundraiser and a man coming off a high profile business failure. Perfect for state government, I guess. Andrew Davis has raised roughly $100,000 for Blagojevich and more than $50,000 for Barack Obama, according to the Tribune.
Last December, without any job posting or candidate search, the ISAC board promoted Davis to the $180,000 job as executive director. He immediately began pushing a plan to sell all of the state's federally-backed student loans, which make up about 80 percent of the agency's multibillion-dollar loan portfolio.
Davis' most previous business history?
Davis' professional history also has raised eyebrows. Before appointment to the board, Davis was best known for running The Rock Island Co. of Chicago, a LaSalle Street securities firm that controlled dozens of Chicago Stock Exchange seats.

He acknowledged in an interview that Rock Island crashed in 2005 in part because of risky deals in which he paid too much to buy out competitors.

"People advised me at the time that I was making a mistake, and they were right, and I was wrong," he said. "It is hard to see the future."
Davis already has sold 15 percent of the student loans. One of the firms that purchased the loans employed John Wyma, a longtime Blagojevich confidant who has made a mockery of Blagojevich's claims he is cleaning up state government. The state loan commission, prior to Davis' appointment, had rejected hiring a law firm because of its connection to Wyma, the Tribune story notes. But it went ahead and rewarded another firm that had previously given a sweetheart deal to Blagojevich's former spokesman.

Where does this leave this sordid mess? We'll see if the Democratically controlled General Assembly or any of the Democratic statewide office holders steps up and halts this debacle.

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