Harris County treasurer wants ban on interest rate swaps regularly used by Harris County Toll Road Authority

A financial gamble made years ago is now costing you millions, and the Harris County treasurer says he wants to make sure it doesn't happen again
January 27, 2014 5:16:18 PM PST
Harris County Treasurer Orlando Sanchez wants lawmakers to put an end to interest rate swaps regularly used by the Harris County Toll Road Authority.

It's a story we first told you about in a 13 Undercover investigation back in June.

In 2006, interest rates were higher than today. Wall Street and the economy were heating up.

The same year, the Harris County Toll Road Authority sold bonds -- some at 4 percent interest and in what's called an interest rate swap. That's what the county treasurer is questioning.

"It's just a bet. No one knows or can predict the market in the future," Sanchez said. "And why would we bet with taxpayers' money on the direction of the interest rates?"

Sanchez says the county has paid millions in the deal. County Judge Ed Emmett says he isn't a fan of the financing.

"I wouldn't do them going forward, but you have to look at the whole picture, and toll road finances are in good shape," Emmett said.

To get out of the deal, Sanchez says the county would have to pay out about $75 million. That probably won't happen, but he wants the legislature to ban local governments from investing in swaps in the future.

"And I could also hit 21 at the blackjack table," Sanchez said. "There's always that chance. The question is whether that's how we want to manage the taxpayers' money."

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