Maine's state Treasurer blamed Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) and credit agencies on Wednesday for leading the state into a failed commercial paper investment that later sparked a ban on these popular securities.
Controversy is heating up in the state over who is at fault for having put $20 million, about 3 percent, of the state's roughly $725 million cash pool this summer into an investment fund called Mainsail II -- two weeks before its sterling ratings crumbled to junk.
The investment met all of the state's investment criteria, but exposed the state to the mortgage market-related losses that have roiled credit markets for a few months. It also prompted the Treasurer to prohibit new commercial paper investments that could cut the interest the state earns.
"I have deep concerns about the recommendations and the process by which that (paper) was delivered to us," Maine state Treasurer David Lemoine told Reuters in an interview. "What was in the background at Merrill Lynch for funneling that suggestion through their broker to us for purchase?"
Controversy is heating up in the state over who is at fault for having put $20 million, about 3 percent, of the state's roughly $725 million cash pool this summer into an investment fund called Mainsail II -- two weeks before its sterling ratings crumbled to junk.
The investment met all of the state's investment criteria, but exposed the state to the mortgage market-related losses that have roiled credit markets for a few months. It also prompted the Treasurer to prohibit new commercial paper investments that could cut the interest the state earns.
"I have deep concerns about the recommendations and the process by which that (paper) was delivered to us," Maine state Treasurer David Lemoine told Reuters in an interview. "What was in the background at Merrill Lynch for funneling that suggestion through their broker to us for purchase?"
