December 12, 2007 (LPAC) – The municipalities which entrusted their monies to the State-run Local Government Investment Fund may not have thought of themselves as suckers, but thanks to the Fund's "investments" in the toxic waste dumps known as SIVs, some 14%-16% of their money has already been lost. Since the problems came to light in mid-November, some $13 billion was pulled out of the fund before it froze withdrawals on Nov. 29, and another $2 billion has been withdrawn since it reopened Dec. 6, despite some restrictions. Making matters worse, the remaining funds have been split into a "Fund A" from which withdrawals can still be made, and a "Fund B" from which withdrawals have been suspended. Municipalities can withdraw all of their funds from Fund A if they wish, but must pay a 2% penalty above the greater of a $2 million/15% limit, and they will likely lose the 14% of their funds in Fund B, which consists of the toxic SIV investments. The Local Government Investment Fund has also suspended interest payments to the municipalities, instead using the funds to cover the losses in Fund B.

The losses have provoked a political firestorm in Florida, as well they should. But the lion's share of the blame goes to a Wall Street which made a fortune selling toxic waste to foolish buyers, and to a Federal Government which abdicated its regulatory responsibilities. And , of course, to the voters who tolerated it.