S.C. Gov. Nikki Haley‘s ongoing war with State Treasurer Curtis Loftis has officially spread to the state’s relationships with three influential credit rating agencies.
The latest conflict- which could impact future state government borrowing costs – began last month when Loftis proposed several long-overdue reforms aimed at reducing the future obligations of our state’s pension fund.
Haley – who has repeatedly bemoaned the size of our state’s unfunded pension liability – has yet to take a definitive position on Loftis’ proposals. While one would assume that a “Tea Party favorite” would support such fiscally conservative ideas, sources tell FITS that Haley has cut a deal with powerful S.C. Senate Finance Chairman Hugh Leatherman that would move our state in the opposite direction on this critical issue.
(To read our exclusive report on the drama surrounding South Carolina’s pension fund, click here).
The rift between Haley and Loftis widened two weeks ago when the governor’s chief of staff, Tim Pearson, unveiled an ill-conceived borrowing scheme aimed at transferring some of the $962 million in debt owed by South Carolina to the federal government for unemployment benefits paid out during the recession. Haley and Comptroller General Richard Eckstrom sought input from the rating agencies regarding this plan – communications which Loftis blasted as “itinerate meddling.”
“The Treasurer’s office has developed and maintained, over the course of the last 40 years, excellent working relationships with our financial partners,” Loftis said. “We cannot afford the itinerate meddling of politicians to impede these relationships; to do so would put our state’s financial reputation and well being at risk.”
On Saturday, Loftis left South Carolina for an eight-day trip to New York and Boston to meet with “rating agencies, the state’s financial and investment partners, law firms and others.”
“I am examining all of our contracts to insure that we create the maximum value for the citizens of South Carolina,” Loftis said, adding that “over the next 12 months virtually all goods and services utilized by the Treasury will be subject to rebidding.”
In an apparent effort to preempt Loftis’ trip, Haley announced on Friday that she would be hosting a financial summit later this spring featuring representatives from all three major rating agencies (Fitch, Moody’s and S&P Rating Services).
Haley’s office said the summit would give “the opportunity for state officials to stress to the rating agencies their commitment to preserve South Carolina’s strong fiscal standing and the state’s AAA credit rating.”
Haley and Loftis have been sparring ever since the 2010 election ended last November – and this obviously wouldn’t be the first time she’s tried to preempt him.
Hopefully, Haley and state lawmakers will eventually get on board with the pension reforms Loftis has endorsed – and reject the risky investment scheme that’s being pushed by Leatherman and others. After all, at the end of the day voters (and rating agencies) don’t care about political drama – they care about dollars and cents, and specifically which plan best promotes the state’s long-term financial stability.
Right now, that’s the plan that Loftis has proposed …
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By Recovering Lobbyist May 16, 2011 at 1:31 pm
As long as Haley is responding to Loftis, and not the reverse, she will lose this fight. She looks petty.
By Rapture May 16, 2011 at 1:39 pm
Sic…..Haley was on ABC babbling along……..catch up.
By john May 16, 2011 at 2:20 pm
She needs to leave the money to the treasurers office. She plays politics and is going to cause us to loss our triple a rating!
By Lynn May 16, 2011 at 2:33 pm
These are the same rating agencies that gave AAA ratings to all those credit default swap instrument that brought down the mortgage market and started the crumbling financial house of cards? I bet they find the food fight between Haley and Loftis as entertaining as WWE Smack Down. Yep, doesn’t improve our stature as adults responsibly handling money.
SLED send in the Cabana Boys I need a drink!
By setg May 16, 2011 at 2:46 pm
Credit of the state is serious stuff! Leave it to the treasurer’s office. Way to serious to allow kids in governor office to mess up
By blt May 16, 2011 at 2:48 pm
When will haley learn. Leave. This to the professionals …
By Skidmarks May 16, 2011 at 2:51 pm
Oh, dear God, keep Nikki Dark Horse away from those people.
By Joe Citizen May 16, 2011 at 2:59 pm
“In an apparent effort to preempt Loftis’ trip, Haley announced on Friday that she would be hosting a financial summit later this spring featuring representatives from all three major rating agencies (Fitch, Moody’s and S&P Rating Services).”
DO WHAT ??? !!!
“The care and feeding of bond rating agencies” is the domain of the Treasurer, not the Governor.
The Governor should desist from meddling and stick to HER OWN responsibilities, which are many.
She should be conducting “financial summits” for companies she and her Commerce Secretary are wooing to establish or expand businesses here.
Governor, leave the man alone.
Get back to your own work.
By Simpson May 16, 2011 at 4:40 pm
The last time the state made such a fuss over the credit agencies we lost one of our triple A ratings. Eckstrom and then Gov Sanford were shooting their mouths off and we got popped!
One bad move and this summit can cause real trouble. Eckstom and Haley have now taken the responsibility off Loftis and put it on themselves. That does not seem to smart to me.
This is not a smart play by Haley. In one move she pisses off Loftis and his supporters, shows she does not understand how this high finance works and risks our financial standing…and for what? A day’s press?
This is amateur hour and I smell Tim Pearson’s dumb ass in the middle of this!
By Leo May 16, 2011 at 7:32 pm
I’m with Simpson. A little knowledge can be dangerous, and our governor’s accounting legacy precedes her. She should really be out of town the day of this meeting with Moodys, S&P and Fitch. They will be underwhelmed with any in-depth dialogue with her. For instance, she knows nothing about GASB rules, pension accounting, portfolio management, cash budgeting, or even what a yield curve looks like.
By Polock May 16, 2011 at 11:52 pm
In between her takes on Fox News, ABC,CNN,and other news stations,I am glad to see that she has time to govern her state. Unfortunately, the “accountant” (with no CPA) has absolutely no business dealing with the rating agencies.
Indeed, she is a pro at pretending she hasnt fucked half of the Columbia establishment, that doesnt translate into knowing a thing about our AAA credit rating.
Raising $800 million on small business is our TEA Party queen.
By JJ May 17, 2011 at 6:53 am
Haley seems obsessed with Loftis. There is something unnatural about that.
This ratings agency summit is a bad idea. Ask any banker, investor or sophisticated financial person and they will confirm that.
By Huhhh??? May 17, 2011 at 8:52 am
Did she REALLY graduate from Clemson?
By sick of your sikh denial May 17, 2011 at 9:53 am
Stop. She DOES understand high finance, She was a book-keeper for years. Not a competant one, but still a high finace book-keeper.
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