Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007.
He didn't know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe.
"I thought they were money markets that were just paying more," Calvanese said in an interview. "Nobody ever used the term 'CDO,' and I am not sure I would have known what that was anyway."
Such financial mistakes, often enabled by public officials' lack of disclosure and accountability for almost 90 percent of government financings in the $2.8 trillion municipal bond market, are costing U.S. taxpayers as much as $6 billion a year, according to data compiled by Bloomberg in more than a dozen states.
I think we have to hand it to Mr. Calvanese for being forthright, which is refreshing. If only the brain trust at the Turnpike Authority were equally clear-minded.
