David Lemoine: Blame it on the Dog

AUGUSTA (Dec 14): Late last summer, State Treasurer David Lemoine invested $20 million in short-term Maine funds in a high risk offshore venture. In November, the Treasurer meekly informed the Appropriations Committee that the investment had gone south. Now widely reported, Lemoine blames Merrill Lynch for the problem and seems to take no personal responsibility for the loss of our tax dollars. This in a time when the state deficit is closing in on a $100 million and probably headed for $200 million before the legislative session closes in the spring.

Reminds me of the lyrics of my friend Warren Nelson’s song “Blame it on the Dog”. It goes like this:

“Blame it on the dog. Blame it on the dog. When something real bad happens, blame it ooooon the dog.”

Lemoine is claiming that the funds will eventually be returned, albeit without interest. That’s a cover story not supported by investment professionals. The funds are likely gone or at best tied up and greatly diminished. Sure, fire the boys at ML but accept some personal responsibility for an irresponsible act Mr. Lemoine.

In Maine, the majority party appoints the State Treasurer. He is not elected and the position has no prerequisites for experience. The Democratic Maine legislature appointed Lemoine, a lawyer without an investment background, to this important post. Lemoine had termed out as a legislator from Old Orchard Beach and his party cronies decided to help the gentlemen out with a patronage plum: the position of Treasurer of the Great State of Maine.

It’s an important position with great responsibilities. For instance, the treasurer serves on the following boards:

* Finance Authority of Maine
* Maine State Housing Authority
* Maine State Retirement System
* Maine Municipal Bond Bank
* Maine Government Facilities Authority
* Maine Health and Higher Education Facility Authority
* Baxter State Park Investment Committee
* Adaptive Equipment Loan Board
* Maine Educational Loan Authority
* Maine Public Utility Financing Bank
* NextGen Investment Advisory Committee

The treasurer manages the state’s 37 bank accounts, controls all state revenue receipts and issues over two million checks and a half million electronic payments each year. David Lemoine is responsible for investing money from the state's cash pool (an average daily balance of $675 million). The treasurer manages revenue forecasting, assists with CMIA compliance, and acts as trustee for a number of state trusts. He issues the state's general obligation bonds and coordinates Maine's presentations to bond rating agencies. He distributes monthly revenue sharing funds to almost five hundred municipalities and manages Maine's unclaimed property.

That’s quite a responsibility for a guy whose only experience with finance appears to be balancing his own check book. Is it too much to ask that the state appoint a treasurer with a financial management background?

Can you imagine this happening in the private sector? Would any Maine company appoint someone to manage company finances who had no financial credentials? And what do you suppose would happen to an employee who blew $20 million in the course of thirty days on a speculative investment that verged on a spin of the roulette wheel? Look, we all know patronage is part of the political menu. (To the winner goes the spoils). The majority party gets a taste - maybe a truck driver here, a toll booth operator there. Fine. I can deal with that, but a STATE TREASURER? That’s beyond the pale.

The Democrat leadership of Maine should fire Lemoine and start a search for an experienced individual with a financial and accounting background. Shame on them for the appointment in the first place, but now they can at least correct the wrong.

We can do better than this. –H-