Mary McMillan doesn’t give up a fight easily.
For two years, the San Mateo County deputy manager and other top officials have been petitioning the federal government for reimbursement of the $155 million lost in investments of the bankrupt Lehman Bros.
She and Chief Deputy County Counsel John Beiers will travel to Washington, D.C., to witness Tuesday’s hearing on potential fraud of the now-defunct investment firm.
The House Finance Services Committee will hold the hearings regarding Lehman Bros.’ bankruptcy to determine if fraud was a
The hearing allows for testimony from U.S. Rep. Anna Eshoo, D-Palo Alto, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, court-appointed Lehman examiner Anton Valukas and Lehman Bros. executives, McMillan said.
Lehman Bros. filed for bankruptcy in September 2008.
McMillan said she hopes the hearing will create a push for better oversight of investment firms.
Supervisor Rich Gordon, who testified in May before a similar committee on the impact the Lehman Bros. failure had on local governments, said San Mateo County invested money on false information.
“And now it turns out there was fraudulent activity and it was not discovered,” Gordon said. “There should be some level of accountability back to the local governments.”
San Mateo County lost the single-largest investment as a government entity.
McMillan and Gordon said if that money had not been lost, things would be much different in the county.
San Mateo County officials are looking at an $85 million cut from its budget next fiscal year. A total of 1,600 layoffs countywide have occurred since the Lehman Bros. bankruptcy.
SamTrans lost $25 million in investing with the firm, McMillan said. The transportation agency is preparing to cut $30 million from its budget in the next two fiscal years. County schools, which lost $40 million, handed out 500 pink slips to teachers.
“There was a hole placed where there didn’t need to be one,” McMillan said.
U.S. Rep. Jackie Speier, D-San Mateo, sits on the House committee and said she would like to see counties such as San Mateo County and other government entities affected throughout the country made whole.
“It was a house of cards,” Speier said of Lehman Bros. “Cities, counties and states are required to invest in only high-grade commercial paper, which is what these pooled investments essentially are.”
To help alleviate some of the pain, Speier introduced House Bill 467 in January 2009 that would give loans to local governments that lost money through the Lehman Bros. bankruptcy. That bill is in the House Services Financial Committee.
McMillan said she also wants to find a way to get taxpayer money back.
“I thought the federal government was supposed to look out for us little guys as much as Wall Street,” she said. “But the ones who created the problem made out fine and we’re the ones left holding the bag.”
How San Mateo County was affected by the Lehman Bros. bankruptcy:
$155 million Lost by San Mateo County
$85 million Budget gap for the 2010-11 fiscal year
1,600 Layoffs countywide
$25 million Lost by SamTrans
$30 million Budget gap for the 2010-11 fiscal year
500 Teacher layoffs
$40 million Cut from school budgets countywide
Source: San Mateo County