Long Beach port sees losses Lehman collapse
California Sen. Diane Feinstein revealed last week that the Port of Long Beach lost nearly $12 million when investment firm Lehman Brothers Holdings collapsed late last year.
Feinstein made the revelation at the opening of the 111th Congress with the introduction of S.116, known as the Troubled Assets Relief Program Assistance for Local Governments Act of 2009. The bill seeks to have the Treasury Department reimburse counties and cities for up to $10 billion resulting from losses sustained in the collapse of financial institutions last year.
According to Feinstein, who called the situation 'dire,' 28 California cities and counties 'are in jeopardy of losing nearly $300 million as a result of investments with failed financial institutions. And dozens of other communities across the country face equally dire straits.”
Just two weeks before Lehman declared bankruptcy, the City of Long Beach invested $19.9 million in 27-day commercial paper issued by Lehman Brothers. According to the city, $11.6 million came from the port authority.
While the city has already hired bankruptcy attorneys with the intention of pursuing recovering the losses from the Lehman bankruptcy estate, city officials are only looking to the Feinstein bill to recoup $100,000 in lost interest the city would have earned from the investment. However, if the Feinstein bill provides the city with total compensation of all losses, the Treasury Department would assume the city's position in bankruptcy court.
City officials said the port's portion of the failed investment was to be split among environmental, security, and infrastructure programs at the port, including $3 million for the port's truck re-regulation program and another $3 million for solar energy programs.