December 18, 2007 (LPAC)-- Late last month, Florida was the victim of a "run on the bank," not by citizens, but by municipalities worried that their local revenues, which they had deposited in a State-run Local Government Investment Pool, were contaminated by bad investments in subprime-related securities. The state was forced to freeze the fund, then split it, in order to isolate $1.5 billion of contaminated securities in a separate fund.

Tuesday's Bloomberg News reveals that $842 million in sub-prime-tainted CDOs which originally poisoned their Pool, was sold to them by Wall Street investment firm Lehman Brothers. Lehman sold the funds in July and August, just as news of the crisis was surfacing. Predictably, its half-life was less than four months.

Even more interesting, is that in June, former Florida Governor Jeb Bush, who subsequently started his own Bush Associates consulting firm, had just been hired by Lehman as a consultant. At the time of the first signs of a run, he was in New York, meeting with Lehman (and possibly Bush), about just this problem. Florida CFO Alex Sink, in what Lyndon LaRouche called "a sign of the times," is now accusing Lehman and JP MorganChase of fraud (foreknowledge) in the sale of the bonds, which they also sold to other states.