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October 10, 2008
Statement of City Auditor Laura Doud Regarding City
of Long Beach Lehman Brothers Investment
Like many businesses, municipal governments, and
individuals, the City of Long Beach has been
affected by the national financial crisis. The City
purchased $20 million of Lehman Brothers commercial
paper prior to its filing for bankruptcy on
September 15. Due to Lehman’s bankruptcy, it is
currently unclear how much of the $20 million the
City will be able to ultimately collect.
Please be assured that City officials are doing all
they can to recover the investment, working through
the bankruptcy courts as well as with the Federal
Government in order to recoup all that they can and
to minimize any losses to the City.
The City Auditor’s Office audits the City’s
investments after every quarter to ensure that all
decisions and practices are in compliance with the
City’s investment policy, which is approved annually
by the City Council. Additionally, a senior member
of my office sits on the City’s Investment Advisory
Committee, which meets quarterly to review the
City’s investment policies, strategy, and
performance. We will continue these important
oversight functions.
It is our duty to the citizens of Long Beach to act
quickly to ensure that all of the investments the
City makes are absolutely secure. Therefore, my
office has initiated a comprehensive review of the
City’s investment policies, practices and controls.
After this review, we will make appropriate
recommendations to the City’s Investment Advisory
Committee and the City Council, as appropriate.
Recent events have reminded us that risk is an
inherent part of investing. Nevertheless, we look
forward to working with the Council and City
management to further minimize this risk and
safeguard the taxpayers’ assets.
Staff
Contact: You are encouraged to contact
Olivia Silva Maiser, Director of Communications at
562-570-6434 or at
Olivia.Maiser@longbeach.gov
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