After more than six hours of testimony and questions from the House of Representatives Financial Services Committee, San Mateo County officials said that while they may not retrieve all of the money lost to Lehman Bros. investments, they are confident steps are being taken to address wrongdoings on Wall Street.
Deputy County Manager Mary McMillan and deputy county counsel John Beiers were in Washington, D.C., on Tuesday to att end hearings in the failure of financial investment firm Lehman Bros.
The firm’s collapse claimed $155 million of San Mateo County taxpayer money when it went bankrupt in September 2008.
McMillan said she was pleased to see members of the House beginning to realize the full extent of the damage done to the county.
“Unlike others, here we are 18 months later and many investors are already seeing a turn in the economy,” she said. “Our argument has always been we were disproportionately at a disadvantage, and I think that is still true.”
Though the hearings were productive, McMillan said there is a lot of work yet to be done. McMillan said she the county continues to work with federal representatives to push legislation and that she appreciated the hard questioning and testimony from them.
“It was a great 1-2 punch from Anna Eshoo and Jackie Speier,” McMillan said of the two local U.S. representatives.
Speier, D-San Mateo, said Tuesday’s hearing — which featured testimony from Eshoo, D-Palo Alto, Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner, court-appointed Lehman Bros. examiner Anton Valukas and Lehman Bros. executives — shined a light on all wrongdoings in the events leading to bankruptcy.
“I think it made the case that the SEC failed to do its job,” Speier said. “The federal government should shoulder some of the responsibility.”
Speier, who sits on the Financial Services Committee, asked Geithner whether, if given the authority, would he restore funds that counties and cities lost because of Lehman’s fall.
“Absolutely,” he responded.
After the hearing, Speier said she is working on including a provision in the Troubled Asset Relief Program that would allow Geithner to restore some funds to local governments that lost investments. That bill is being debated in the Senate.
Eshoo said she also plans to introduce a bill, known as the Restitution for Local Governments Act. The bill authorizes some of the bailout money that is being repaid to the federal government to be used to help local governments that suffered from Lehman’s fall.
“We need to help the municipalities,” she said, “and we do that, we are helping America get back on her feet.”
Some of the effects the Lehman Bros. bankruptcy had on the Peninsula:
$155 million Amount lost by San Mateo County
$85 million County budget gap for fiscal year 2010-11
1,600 Layoffs countywide
$25 million Amount lost by SamTrans
$30 million SamTrans budget gap for FY 2010-11
500 Teacher layoffs
$40 million Amount cut from county school budgets
Source: San Mateo County