THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, March 24, 1995 TAG: 9503240141
SECTION: CHESAPEAKE CLIPPER PAGE: 06 EDITION: FINAL
TYPE: Another View
SOURCE: BY BARBARA O. CARRAWAY
LENGTH: Medium: 53 lines
On March 5, the ``60 Minutes'' television program aired a report on investment deals that have gone sour for various government entities. This program ended by leaving a question mark in the minds of the viewers about how many other government entities would face similar situations in the near future.
I would like to set at ease the minds of City Council members and citizens of Chesapeake that those situations described by ``60 Minutes'' will not take place in Chesapeake and that I take very seriously the fiduciary capacity which comes with being treasurer for this great city. I assure you that the city's funds are invested in strict compliance with the Code of Virginia Investment of Public Funds statutes and in compliance with the guidelines established by the City of Chesapeake Investment Policy.
In all cases, the city's investment policy is to purchase only those securities of high credit quality. Typical investments include high-quality commercial paper, bankers acceptances, certificates of deposit or debt securities issued by the government or government agencies. We do not purchase the exotic investments available today which have been making recent headlines in The Wall Street Journal and local newspapers.
Always we ask these questions before a purchase is made:
Does this investment conform to our investment guidelines?
Does this investment conform to our established suitability standards in terms of portfolio objectives, liquidity needs, cash flow requirements and diversity?
All the city's investments are made consistent with the safeguards and diversity to which a prudent investor would adhere. As we all know, Orange County, Calif.'s massive investment losses, stemming from a combination of derivative purchases and leveraging, was beyond the level of acceptable prudence.
In summary, I understand there are no free lunches. High returns equal high risk. That is why I adhere to this investment principle which follows the formula ``S.L.Y.'' My primary concern as investor of public funds entrusted to me is safety, then liquidity and, finally, yield.
There is no shame in being a conservative treasurer who is known as a ``plain vanilla investor.'' And, it certainly allows me to sleep better at night knowing the city's investment funds are safe and secure without the concerns and question mark left in the minds of viewers of ``60 Minutes.'' MEMO: Ms. Carraway is treasurer of the city of Chesapeake.
by CNB