Tuesday, April 14, 2009

Why the $15K for a review of Water Authority Bond Deals was foolish and nothing about 'knowledge is power.'

City council voted 6-3 to not spend $15,000 to hire an outside firm to conduct a review (call it audit, investigation, whatever) of the recent bond dealings of the Water Authority.

I'm fine with that vote. But, I'm not fine with some of the thinking and statements that swirled around this topic. Time to flush.

Bruce Kraus said "Knowledge is power." That's funny.

First of all, city council does have power. But, power does not come with a $15,000 audit by some dis-interested party. Power, instead, resides upon the votes that empowered the water authority to advance with such deals. Months ago, council voted to enable the authority to extend its life which empowered them the opportunity to enter into bond deals with serious questions.

The power is in the vote. The power needs to be applied at the correct time. Power does not linger in a re-do.

Council needs to deploy its power, as keepers of the purse strings, in wise measures when the votes are cast. Council fumbled its chance at power when it entertained Don Walko, D, state rep and water authority board president, as he pulled the wool over the eyes of council then.

Want to talk about power -- let's talk about J.P. Morgan and other finance types who conduct these bond deals. They are able to steal by the millions from the public treasury. They can't be taken down by a $15,000 audit from some disinterested firm. Never go big game hunting with a pea shooter. That's not smart. It isn't powerful either.

The plain English explanation of these deals might be nice. But that isn't going to trip a giant in the slightest.

If that firm wants to work again in the finance sector, it isn't going to pick a fight for $15,000 fee with J.P.Morgan.

Furthermore, if the audit did provide real investigative eureka moments, it would be called 'spin' and would be discounted.

If you want power, turn to the controllers -- for the city, county (perhaps) and state. They have audit powers. And, they are the ones that are to review the dealings of government. Council is to legislate. Controllers audit.

If more muscle and power is necessary, then investigate with the state attorney. The subpoena has power. Call for that. When people steal money from the government, they should go to jail -- or worse. In China, the bureaucrats that cheat the system are killed. France gave the world the guillotine. Those are not the tools of power for Pittsburgh's city council.

The bottom line isn't passing a bond deal. The bottom line isn't complicated bond deals with windfalls by the millions. The bottom line is going to jail. Fix expensive mistakes with jail. If you want to look out for the public interest, even after being hoodwinked, the math that aids the interest of the taxpayers money should be part of the settlement of damages. There is the real bottom line.

Bram wrote in a comment thread on this topic that he does NOT care that the Council should have caught this the first time around. Plus, he does NOT care that it would be better if our Controller to do it. Jeepers. You should care. Purpose matters. Watchdogs need to stay awake and care. I care that we don't have over-reaching members of city council who stretch so much that they remain meaningless for decades to come.

Memo to Council: Get it right the first time. Don't squander your power. I knew that this was a sour deal from the get-go.

Memo to Council: Let the controller do audits.

Memo to Controller: Get moving already.

Memo to Jack Wagner, State Auditor: Hello!

Memo to Tom Corbett, State Attorney General: Hello!

Memo to voters: Don Walko isn't to be trusted and shouldn't be a judge.

Memo to gov reformers: All authority board members should be held accountable with retention votes as a regular part of our charter's framework, until the authorities are liquidated in full. (Pun alert.)


Bram Reichbaum said...

"Power does not linger in a re-do."

Why not? It sounds to me like you are standing on a principle where none exists. I like it when leaders examine their past actions and make up for mistakes; particularly mistakes that cost me.

$15,000 < tens or hundreds of millions. Case closed. Don't invent "principles" that don't exist. The business that extract money from cities aren't so scrupulous and proper -- why must we weigh ourselves down with maxims and formulas which exist only in Libertarian abstraction? We want solutions to problems. This was the avenue. It is gone. Enjoy your excruciatingly invented principles while the City suffers.

Mark Rauterkus said...

The principal is purpose. Duty matters.

To make up for their past mistakes -- that would be GREAT. But, an audit of $15,000 is NOT such a deed.

They could introduce legislation to liquidate the water and sewer authority. That would make up for the past mistake of forming such an authority.

They could put in legislation that calls for all authority board members to face accountability by having to pass a retention vote to keep their appointed positions.

What costs you is $15,000. The city council bill was to spend more money.

Tens or hundreds of millions in the bond deal has to be uncovered by city controller Michael Lamb -- if it is there to uncover at all. HE has to take down the investment bankers -- not some dis-interested third party.

Don't invent solutions that are not fixes at all.

Businesses that extract money from cities in unfair ways should be punished by attorneys and money should be recovered and people should go to jail. That ain't happening with a $15k audit.

I'm living in the real world, BRAM.

And, I'm living with the majority as well.

The avenue you advocate is a dead end. It is a waste of money. It is over-reaching false hope.

The city does suffer when bone-headed legislative jerks are doing all the things they should not and ignoring the important things that they should concentrate upon.

Justin Kownacki said...

A re-do is fine by me, as long as it's not just an excuse to throw good money after bad. Not every choice will be made right the first time, but we also can't waste more money (that the city doesn't have) auditing what goes wrong when there should be built-in failsafes (and efficiency audits) in the first place. Or are contracts currently bid without audits included?

Mark Rauterkus said...

It is not a 're-do.' Rather, they wanted to make an 'audit-do.' I'm fine with a re-do. This isn't a re-do. Not even close.

And, we are going to have an audit. City controller, Michael Lamb, is going to be doing an audit on the Water & Sewer Authority this summer -- weeks away.

Let him do his job. Let's watch that he does the whole job. Let's light a fire under him to get serious with this task.

The contracts are let to the bond folks -- and they might not have any competitive process to grant those deals. Unsure. And, the bond deals are to be done with the oversight of the authority board. So, if they prove to be crooked -- the authority board members should be held accountable by force of jail time / criminal charges.