California Impact

Saving California from Insolvency

Many of you may recall the Municipal Bond Crisis of 2010 where global investors assumed that California would default.  California’s cash position was exceptionally precarious.  If California failed, the entire municipal bond market in The United States was at risk of default and bankruptcy.

Frank was asked by California’s Governor and Treasurer, to help support the most critical municipal bond auction in California’s history.  Rumors of a catastrophic default loomed and a bipartisan response to the markets was critical.

Sensing the crisis, CNBC dedicated an entire day to the looming California default and bond auction to occur that morning.  The title of the broadcast day was “Debt Threat: States of Pain.”

CNBC wanted Frank to lead the broadcast, thereby setting the tone for the entire day…just minutes before the actual California bond auction was set to occur.

CNBC’s David Faber grilled Frank, live on-air, to provoke the emotions and fear of the markets that AM.  Frank held firm, and calmly navigated David thru the mechanics of the California municipal market.  His interview ended and the CA municipal auction began.

Minutes later, Treasurer Lockyer called Frank and his team on the floor of the NYSE to share that the auction was a huge success.  It was so successful that CA had added more municipal supply given the exceptional investor demand.  California was successfully funded.

This auction was seen as the seminal event in CA history as the State recovered back to solvency. 

Links to the editorials that followed Frank’s broadcast can be found here.