The Denver Business Journal is reporting an astonishing story about the Denver Public Schools paying 6.17 percent interest on $396 million of floating rate bonds that were part of a larger bond offering in 2011. The bonds were issued to fund a required contribution to the school system’s pension fund:
Two national stories yesterday shed light on the foolishness that’s taking place on the fringes of the public pension world. The first story, from the Los Angeles Times, is about pension obligation bonds – a classic tale of fancy, Wall Street-devised products that promised more than they could deliver. The second story, from the New York Times, is about a scheme, dreamed up in an ivory tower, of having state government pension plans take over responsibility for the pensions of corporate retirees. The mind reels at the complexity and difficulty of this idea.