WDEL Blog: Allan Loudell

Any questions for tonight's Democratic state Treasurer's debate?

I'm hosting / moderating tonight's debate (upstate, on 1150 A.M. WDEL & wdel.com) of the two candidates seeking the Democratic nomination for State Treasurer - incumbent Treasurer Chip Flowers and his primary opponent, Sean Barney. Airtime: 6--7 p.m.

Any questions for them? If you have a "leading" question, try to put it in the form where it challenges BOTH candidates.

I host the G.O.P. Treasurer's debate next Wednesday, August 13th.

Posted at 9:41am on August 4, 2014 by Allan Loudell

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Comments on this post:

Mike from Delaware
Mon, Aug 4, 2014 10:28am
Sorry Allan, nothing comes to mind for both candidates other than the usual what's your educational background, why do you believe you are qualified to the Treasuer.

However, one question that needs to be asked of Flowers [can't really ask Barney this]: Why should the citizens of Delaware give you a second chance handling THEIR money given the ethical shortcomings you demonstrated in this current term as Treasuer. As a reporter that seems like a reasonable question to ask Mr. Flowers and is the one question anyone listening would ask themselves if they had the microphone.

Mon, Aug 4, 2014 10:36am
This was a thread on Del Liberal...

Explain the $44 million your billboards tout you saved.... The explanation has since been posted over there, but... there was a lot of scrambling and stabs in the dark beforehand, so that means even savvy people don't know what is going on....

Another way to phrase it would be... How much has the Cash Management board cost Delaware from where it could be if different investment rules were applied.......

And another one that covers issues that people need to know.

What would you say if the Cash Management board had a member who was cited and fined over $900,000 by the SEC in October 1999 for fraud? Is that an offense that can be overlooked by someone in charge of the state's money?

Mon, Aug 4, 2014 12:51pm
Question: During your past term you stressed that the Cash Management board was potentially costing Delaware money. Can you explain for all of us, how much they were costing us, and why you thought it necessary to make changes.

Question: many Delawareans are confused. If making more money for Delwareans was the job of the Cash Management Board, why did the Politically connected all side with the Cash Management Board, over the Treasurers attempt to make more money for Delawareans?

Mon, Aug 4, 2014 12:53pm
Question: During your last campaign you stressed that the Treasurer needed to do more to create jobs for Delawareans. Admittedly since the Treasurer doesn't make laws or rule with executive force, that is a bit of a stretch. Can you explain to your constituents and opponent, how you did on your original campaign promise?

Mon, Aug 4, 2014 12:56pm
To Barney: The Delaware Treasury has had several good treasurers. What would you do differently from Tom Carper, Jack Markell, and Chip Flowers, to move the Treasury Department forward? What makes you unique and the best candidate for this position?

Mon, Aug 4, 2014 1:00pm
And for fun.

To Barney: Do you like dressing up in a purple dinosaur suit for public television and singing "I love you; You love me?"..... How does that bring stature to the Treasure of the state of Delaware?

And to be fair; To Flowers: Does your last name make you a state expert on bees-ness?

Mon, Aug 4, 2014 1:49pm
Here is the judgment by the SEC against David F. Marvin, one of the members who sit on the Cash Management Board controlling Delaware's money.


Accordingly, IT IS HEREBY ORDERED that:

A.M&P shall be, and hereby is, censured;

B.M&P shall cease and desist from committing or causing any violation and any future violation of Sections 206(1), 206(2) and 207 of the Advisers Act;

C.M&P and MacThom shall, jointly and severally, within 30 days of the entry of this Order, pay disgorgement and prejudgment interest in the total amount of $976,980 to the United States Treasury. Such payment shall be: (A) made by United States postal money order, certified check, bank cashier's check or bank money order; (B) made payable to the Securities and Exchange Commission; (C) hand-delivered or mailed to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Alexandria, Stop 0-3, VA 22312; and (D) submitted under cover letter that identifies M&P and MacThom as Respondents in these proceedings, and the file number of these proceedings, a copy of which cover letter and money order or check shall be sent to Ronald C. Long, District Administrator, Philadelphia District Office, Securities and Exchange Commission, 601 Walnut Street, Suite 1120E, Philadelphia, PA 19106;

In the last debate, Sean Barney was very supportive of these guys, pointing to Flowers not being able to get along with them. I don't think Barney knows of his crooked past... So if Barney does take that approach, you might have an opportunity here to create some radio drama... by following up why he thinks one must get along with people cited and fined 976,000 by the SEC or something like that...

To help you verify it is the same Dave Marvin, here is this link, which should satisfy anyone's curiosity...


And for background here is Celia's report from way back when on the inside scoop of the CMB


Mon, Aug 4, 2014 4:30pm
As to Mr. Flowers:
During the last debate Flowers mentioned that he pulled Delaware money from a bank that he described as failing. His point in doing so was two fold: (1) he prevented the loss of Delaware monies; and, (2) the Cash Management Policy Board is too cozy with certain banks and they wouldn’t pull it because they are conflicted.
Ask Mr. Flowers to specifically identify that bank and, more importantly, what capacity that bank was operating, i.e., was it operating as a trustee type bank or an investment (see below). Finally, ask Flowers under what legal specific authority he operated under when he pulled the money. My understanding is that if he did as he claims, then he broke Delaware law. Please do not let him off the hook on identifying the bank and the capacity in which it was operating.
The CMPB alone has the authority to control investment of Delaware’s monies. This is set out in 29 Del C. 2700. The Treasurer has no direct constitutional or statutory authority to do so. The CMPB publishes investment policies relating to State of Delaware monies. It can be found at http://treasury.delaware.gov/wp-content/uploads/CMPB-Investment-Guidelines-for-web-as-of-Mar-2012.pdf
When Flowers mentioned the failing bank, I immediately thought he must have been referring to Wilmington Trust. Then I checked the dates of his election and M&T’s acquisition of Wilmington Trust. According to the WSJ, M&T’s acquisition was publically announced on November 2, 2010. http://online.wsj.com/news/articles/SB10001424052748704141104575588064272601610
Flowers was elected in November 2010 and took office in January 2011. This timing essentially eliminates Wilmington Trust as the potentially defaulting bank.
As for protecting against the loss of Delaware money, the explanation simply doesn’t wash. First off it is essential to understand what bank, and in what capacity it was operating, in order to appreciate Flowers’ claim that failure was imminent and what failure meant, if anything.
For investment of Delaware’s funds, banks generally fall into one of two capacities. Either the bank can serve as an indenture trustee directing investments of Delaware’s funds consistent with both it’s general trustee fiduciary obligation (i.e. no self dealing) and investment policy set by the CMPB; or a bank can also serve as a investment vehicle. Two types of banks – fundamentally different rules, and risks and concern.
If the bank is in a trustee bank role, then Delaware’s money is not held by that bank as an investment – they are a fee for their service. Rather the trustee bank invests Delaware’s money at the State’s behest. Importantly, as a trustee, the CMPB prohibits the trustee bank from buying “or sell any authorized investment when it is a party or any related or affiliated party in the transaction on both sides.” CMPB at § III(B)(10). Translated: the trustee bank can’t invest in itself using Delaware’s money. Why is that important? Because as a trustee, the bank can only place investment in third-party investments. This means that the trustee bank could go up in flames BUT the third-party investments would be safe from that fire. Conversely, if the potentially failing bank serves as an investment vehicle for Delaware’s money, then that bank had meet certain pre-determined return on investment benchmarks, liquidity thresholds, or rating agency rankings for the investment to be made and maintained. These criteria are set out in Section V of the CMPB Guidelines & Objectives. These investment banks pay Delaware a return for the use of Delaware’s money.
Hence, if a bank was potentially failing, then a few things had to be true:
1. If it was an trustee bank, its failure was a non-event from Delaware’s perspective because Delaware’s money was never an asset of the bank and never at risk even if the trustee bank failed. If this is the case, then Flowers’ claim of failure is wildly overblown
2. If it was an investment bank, then two, mutually exclusive things had to be true: (1) Flowers and only Flowers was aware of the bank’s propensity to fail or the CMPB was derelict and failed to monitor investments; or (2) the CMPB knew yet failed to comply with its own guidelines on ROI, benchmark, liquidity or rating agency benchmarks and allowed Delaware’s money for remain parked in a bank that it should not have been. Given Flower’s much ballyhooed criticism of the CMPB, if this was the case, he would have been screaming from the highest building to publicize the particulars. He hasn’t. The bottom line here is that neither answer is acceptable.

This raises the question, even if the bank did fail, the investments were safe from that failure unless Delaware's funds were invested in that failing bank - something that the CMPB prohibits. If that is correct, why was the potential failure an issue. Likewise, don't Delaware citizens have a right to know the who/what/why/when about a situation that Flowers describes as

Mon, Aug 4, 2014 5:42pm
As to Mr. Barney:

The knock against him is that he is no more than a lackey of Jack Markel or Tom Carper. I don't know that, even if true, it matters except that Flowers is running a campaign that pivots off his anti-establishment perspective.

Ask Barney to differentiate himself from his apparent masters. Put him on the spot. if you can. Barney really needs to say why he wants to be Treasurer. On paper the job is little more than a rubber stamper. Is he running solely as a stepping stone for another office?

Mon, Aug 4, 2014 8:01pm
Please tell Barney Fife to say hello to Sheriff Andy for me.

Tue, Aug 5, 2014 4:47pm
That was a very good debate Allan.. I learned some things that even from pouring over Delaware code, had not been put as clearly as did Chip when explaining duties of the office.

That is the sign of a good debate: learning something... So hats off to you, Sir....

Tue, Aug 5, 2014 4:58pm
Follow-up on the debate.

Flowers claims that when he took office, Delaware money was not collateralized and therefore at risk of loss. To some extent he is correct and incorrect. On the whole, however, he is overplaying this issue.

The CMPB specifically requires collateralization on certain investments if those investments fail to meet certain criteria - mostly performance criteria. Hence, if an investment is not performing well enough over a defined period of time, then the CMPB's investment policy requires it to seek collateralization. The policy is intended to cause a re-placement of those investments.

On the other hand, if investments are performing within acceptable rates of return, then the CMPB does not call for collateralization.

Flowers' contention that a lack of collateralization is an irresponsible investment approach is boneheaded. To begin with, certain investments are structurally collateralized; think corporate and government bonds. Requiring further collateralization is financially and legally problematic. Other permissible investments such as CD's are generally very liquid. While collateralization might appear necessary, demand for it ignores almost immediate liquidity of those investments.

Bottom line: A life preserver in a bathtub is unnecessary. So to is collateralization unnecessary for most of the CMPB approved investments,

Tue, Aug 5, 2014 7:57pm
Sher Valenzuela goes to my church, so I'm voting for her even though I live out-of-state.

Wed, Aug 6, 2014 1:09am
Pizza how can that be? You go to church on Baltimore Pike, and she goes down in Milton.

Wed, Aug 6, 2014 6:59am
She and her husband drive up from Milford every Sunday to attend Word of Life. They have been for awhile.

Mike from Delaware
Wed, Aug 6, 2014 8:29am
What, no Properity Gospel churches near Milton or Milford or even Dover? haha !

So, she's driving roughly 80 miles each way [approx 160 miles round-trip] from Milton or Milford to a Newark area church. Isn't she a state rep or state senator? I sure hope the taxpayers aren't footing the bill for gas/wear and tear on their car for these trips up north for church. If she's doing that on her dime, no problem.

Also if she says she makes the trip each way in an hour, then she's also violating the speed limits [just because she has a legislator tag on her car shouldn't give her ammunity from traffic stops, speed traps, etc., either.

It just seems a little odd that she'd drive from the lower end of the state to the upper end of the state [two counties away] to attend church. There is one decent-sized evangelical church I know of, in Milford. Given the fact that Sussex County is the reddest county in Delaware and that according to polling data, most Christians, especially the Evangelical type, are Republicans [or Red staters] there must be some other good Evangelical churches down state. It seems odd that she'd travel to Blue county NCC [that downstaters loath] to come to church.

Does the rest of her family live up in NCC?

Allan Loudell
Wed, Aug 6, 2014 9:13am

Sher (Cheryl) Valenzuela does not hold any elective office.

So you can't get her on driving to a house of worship (or anywhere else) on the taxpayers' dime.

Valenzuela raises the ire of liberal critics for other reasons.

For example, although the G.O.P. seems to champion her as an example of the party's diversity, she gets her Hispanic surname from Eli Valenzuela, her husband, who grew up in Texas, and is of Mexican heritage. Sher's white, of Slavic heritage. (It doesn't hurt that First State Manufacturing can position itself as a minority-owned contractor.)

Secondly, despite the narrative about the Valenzuelas building First State Manufacturing by their hard work and sweat, what doesn't get mentioned is how the Valenzuelas nourished their family enterprise with Federal financing and Federal government contracts. First State Manufacturing received a $301,000 loan backed by President Obama's stimulus bill, the American Recovery & Reinvestment Act, to finance the acquisition of a factory. The Small Business Administration also backed a loan of $293,000 to help refurbish the structure, and Valenzuela negotiated a $700,000 credit line with government support. Federal government contracts, mostly from the Department of Defense (including stimulus-funded projects) greatly contributed to the company's growth.

Of course, when Ms. Valenzuela was addressing the G.O.P. national convention, she castigated regulations on business from the administration.

Allan Loudell

Mike from Delaware
Wed, Aug 6, 2014 10:28am
Allan: Thanks for the rest of the story. I guess I remember seeing her name on election posters [and hearing about her being a keynote speaker at the G.O.P. convention, being from Delaware] during the last election. I seem to remember she was running for office, but maybe she didn't win. Anyhow thanks for the clarification.

Interesting how she's benefitted from her husband's minority status [maybe Slavic last names are also considered a minority] and Obama's [Democrat] stimulus programs to help their business, while being a Republican and backing the Republicans' no-regulation-on-business platform. So she essentially is biting the Democratic hand that fed her and her husband's company. So she wants it both ways, all the benefits of big government programs via the Democrats, and yet having the no regulations on businesses AND low taxes on the wealthiest 2%. All the perks with none of the cost.

Sounds like Mrs. Valenzuela will make a great Republican politician.

Wed, Aug 6, 2014 7:57pm
MFD: Not only are we a "prosperity gospel" church, we're a TEA/GOP church.

Wed, Aug 6, 2014 8:48pm
Yeah, I'm proud of that, so save the long dissertation about "taking up your cross".

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