County Judge Jon Burrows said he felt it appropriate, during a time when the national market is in turmoil, to reassure the public that county funds appear to be safe.
County Treasurer Charles Jones reported to commissioners court Monday about the strength of TexPool, where the county and many other government entities in the state invest money.
The county has $97.7 million invested in TexPool. Some 130 funds help account for that figure, including the county’s general fund and bond money to be used to pay for the new jail and county courts building.
Officials with TexPool have been quick to respond to recent bankruptcies or news of financial troubles from large national investment firms.
On Sept. 17, Comptroller Susan Combs issued a statement that she was terminating the state’s contract with global investment bank Lehman Brothers, which worked with TexPool and TexPool Prime - the state’s two investment pools for local governments.
Lehman Brothers filed for Chapter 11 bankruptcy protection on Sept. 15. Although Lehman Brothers only handled marketing and client services for the pools, Combs said the termination was necessary to maintain TexPool investors’ confidence.
“Investors are currently suffering the effects of one of the greatest crises of confidence in the capital markets in recent memory,” Combs said. “Given Lehman Brothers declaration of bankruptcy, the fragile state of the capital markets and the heightened sensitivity of investors to adverse news, the continued affiliation of TexPool with Lehman Brothers is unacceptable.”
What would really hurt Bell County and counties all over Texas is if the federal government chose not to bail out Fannie Mae and Freddie Mac, officials said.
Congress is considering a $700 billion rescue plan that would help keep the struggling mortgage finance giants afloat.
“Everybody invests in Fannie Mae and Freddie Mac,” Jones said. “That’s one of the reasons it’s so important for the federal government to pick them up. If they unraveled, it would be devastating.”
On Sept. 7, The Federal Housing Finance Agency announced it put Fannie Mae and Freddie Mac under conservatorship. Within days, Bell County received a message from Federated Investors, the investment adviser of TexPool, regarding the debt of the two mortgage firms.
“Please note that Fannie Mae and Freddie Mac now have explicit support from the federal government and TexPool owns only the senior debt of these two agencies,” the document read.
“We feel like we’re as safe as we can be with our investment of county funds,” Jones said.
