Public school districts in San Mateo County are likely to lose millions from the bankruptcy of investment firm Lehman Brothers, but some of the county’s cities and towns have fared better.
Portola Valley, Woodside and Menlo Park had no losses associated with Lehman’s collapse. Atherton lost about $500,000, or between 5 percent and 6 percent of its $9.6 million account with the San Mateo County Investment Pool, the town’s interim finance officer, Bill Yeomans, told The Almanac.
Atherton is one of 13 or 14 cities and towns voluntarily participating in the pool, which was recently valued at $2.7 billion and lost an estimated $155 million in the Lehman bankruptcy, county Treasurer Lee Buffington said in an interview. By state law, school districts must put their revenues in the pool.
A state entity, the Local Agency Investment Fund, manages all of Portola Valley and Woodside’s investments and 40 percent of Menlo Park’s portfolio, officials said. (The other 60 percent is independently managed, Menlo Park Finance Director Carol Augustine said.)
Atherton has slightly less than 50 percent of its portfolio with the state fund, Mr. Yeomans said.
The state fund accounts “(did) not have any exposure” to Lehman’s collapse, the fund’s investment director Daniel S. Dowell said in a statement.
That fund was also unaffected by the bargain-basement sales of Washington Mutual commercial bank and Merrill Lynch investment bank, and the federal multi-billion-dollar bailout of American International Group, Mr. Dowell said.
Conservative investments
The county’s final numbers for Lehman-related losses are expected this week, but the estimates are not likely to change much, Mr. Buffington said.
Asked to describe the investment in various Lehman debt instruments, he replied that they were “very conservative” and “not risky.” The pool made money in September. “We did pretty well,” Mr. Buffington said.
The pool may recoup something from the sale of Lehman assets, but other influential creditors are making San Mateo County look like “a speck of dust,” he added.
The county phoned Rep. Anna Eshoo, D-Menlo Park, soon after Lehman’s bankruptcy filing so as to get representation in federal bankruptcy court, Mr. Buffington said. “We don’t want to be squeezed out of that bankruptcy hearing,” he said.
Asked if he’d considered selling the pool’s Lehman holdings on the Friday before the Sunday, Sept. 14, bankruptcy declaration, Mr. Buffington noted that hindsight is always better. He said that he and the county’s bond trader had been watching the company closely while bearing in mind the federally backed bailout of investment bank Bear Stearns earlier this year. Pulling out “didn’t appear to be prudent,” he said.
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