"Actions in office
[edit] Ethics reform
On his first day as State Treasurer, Giannoulias "signed his own executive order to enact the most comprehensive, widest-ranging ethics package of any elected official in the state", according to his official state website. "The order prohibits [the Treasurer] from accepting contributions from banks, Treasurer’s Office employees and contractors who do business with the office."[2] He also moved to foreclose on two debt-ridden hotels built in the 1980s by politically-connected insiders in Springfield and Collinsville.[11][12]
[edit] Hartmarx
In 2009, Giannoulias worked to encourage Wells Fargo to cooperate in the sale of Chicago-based clothing manufacturer Hartmarx Corp., which was at risk of liquidation and had filed for Chapter 11 protection. The success of this sale with Giannoulias’ support saved over 600 jobs at an Illinois Hartmarx factory that otherwise would have been closed.[13]
Wells Fargo, a primary lender for Hartmarx, is also “the money custodian for the treasurer’s office, holding its cash and other financial assets."[14] Giannoulias publicly challenged Wells Fargo’s obstruction of the sale, stating that “[Wells Fargo’s] intention to liquidate Hartmarx rather than allow a sale to buyers intent on keeping the company running will significantly jeopardize the business relationship between Wells Fargo and the state of Illinois.”[14]
Giannoulias cited the fact Wells Fargo received over $25 billion in federal TARP bailout funds as further reason why the bank should have supported the sale of Hartmarx instead of pursuing the company’s liquidation. In a public statement, Giannoulias said, "We expect companies that get state and federal taxpayer money to invest it in American jobs and American workers, not destroy companies that still have a chance to succeed."[15]
[edit] Green Rewards
Giannoulias launched the "Green Rewards" program, which gives a $1,000 rebate to Illinois residents who purchase a new hybrid or other fuel-efficient vehicle.[16]
[edit] Purchase of Israel Bonds
In January 2009, the state of Illinois purchased $10 million worth of Israel Bonds. Giannoulias said: "This is a good way to safely diversify our portfolio, especially during a time when some of our other investment options aren't generating as much revenue because of the market fluctuations here in the United States."[17] According to Giannoulias, the Israel Bonds will mature in three years with a 2.43% rate of return, compared to U.S. government bonds yielding a 1.51% return during the same period.[18]
[edit] Scholarship programs
In addition to revamping the Bright Start savings program, Giannoulias created several new scholarship programs for Illinois college students.
The Fallen Heroes Scholarship Program, which Giannoulias designed in a partnership with the Illinois Department of Veterans Affairs, awards an initial investment of $2,500 in college savings to children who have lost a parent in military service since 2001.[19]
In 2008, Giannoulias announced the creation of the Bright Start Scholarship Program, which will award $3.5 million in need-based scholarships over 7 years, until 2015.[20] More than 250 students received scholarships in 2008, the first year of the program.[21] The scholarships were designed by Giannoulias as a public–private partnership, with the funding for the scholarships donated by a private firm at no cost to the state or taxpayers.[22] Giannoulias also developed the Cultivate Illinois Excellence in Agriculture scholarship in 2008. This program awards ten $2,000 scholarships each year to students pursuing degrees in agriculture-related fields.[23]
[edit] Bright Start
As Illinois Treasurer, Giannoulias is responsible for overseeing the Illinois' Bright Start college saving program. Bright Start provides parents with the opportunity to invest in a tax-free account to save for their children's college education. Enrollees are eligible for several state tax benefits and can invest in various stock and bond options.[24] Before Giannoulias took office, SavingForCollege.com ranked Bright Start 47th out of 48 in the nation.[25] Giannoulias helped reform the program,[26] and Bright Start went from being one of the worst programs in the country to one of the best. Morningstar called the transformation “a Cinderella story.”[27]
In 2008, one of the twenty-one funds in Bright Start, Core Plus, began experiencing excessive losses and eventually lost 38% of its value. In the same year, the overall Bright Start program’s benchmark grew by 5.4%.[28] Within the Illinois Bright Start program, 2.5% of investors had invested their entire portfolios in Core Plus and suffered a 38% loss; others experienced smaller losses.[28]
As the Associated Press reported, "It turns out the Oppenheimer team handling Core Plus — a team the company has now fired — was putting money into risky, complicated investments that tanked in 2008 amid the general financial meltdown."[25] In 2009, Oregon,[29] Nebraska,[30] New Mexico,[31] Texas,[31] Maine[31] and Illinois[31] all investigated OppenheimerFunds’ handling of the their college savings programs for impermissible investments and misconduct. Oppenheimer was selected to lead the program by Giannoulias' predecessor, former Illinois Treasurer Judy Baar Topinka, in December 2006, a month before Giannoulias took office.[32]
After the credit markets collapsed in the fall, new contributions into the fund were halted on December 4, 2008.[25] In January 2009, the treasurer’s office announced that no further contributions would be made to the Core Plus fund and that the state would be investigating the losses.[33]
According to the Associated Press, Illinois was the first state to take action.[25] In January 2009, at the request of Giannoulias, the Illinois Attorney General initiated its own probe of OppenheimerFunds, issuing subpoenas on the company.[28] At the time, the losses attributable to OppenheimerFunds' impermissible investments were estimated to be "in excess of $85 million."[28]
Despite the problem associated with OppenheimerFunds' handling of Core Plus, Bright Start remains a highly-regarded 529 college savings program. In April 2009, Consumer Reports studied college savings programs across the country “to see how well they performed during last year’s stock-market plunge.”[34] Consumer Reports “found five that are worthy of an A,” and ranked Bright Start as one of the top five college savings programs in the nation.[34] In April 2009, Money Magazine selected Bright Start as one the “best low-risk 529 plans.”[35] In December 2009, Kiplinger's selected Bright Start as one of the best state 529 plans in the country, choosing it as the best plan for “low fees.”[36] Morningstar, Inc., which had previously ranked Bright Start in its top 5 in 2008, has acknowledged the issues relating to Core Plus but, citing Illinois’ swift action in dealing with the issue, reported in 2009 that “the plan still holds plenty of appeal.”[37]
In December 2009, the Illinois Attorney General's Office and the Office of the State Treasurer announced that Illinois had reached a settlement with OppenheimerFunds.[38] Eligible accountholders who lost money in Core Plus would receive $77 million from OppenheimerFunds. As the scope of the settlement was expanded during negotiations with OppenheimerFunds to include more accountholders, the total loss addressed by the settlement is $150 million.[39] The payout from this settlement brings the losses for the 2.5% of Bright Start investors who were fully invested in Core Plus down to 17%.
The Treasurer's Office used some of the investment fees from the Bright Start program to purchase a hybrid vehicle to "so Bright Start staff have a way to travel the state and sign families up for the program" and used to promote other Treasurer's Office programs.[40] The vehicle was never used for personal use by Giannoulias.[40]"
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