Bredesen: I really first started hearing about this a couple of weeks ago. It's been a new thing for me. I certainly think further and stronger monitoring from the state, there are places where derivatives make sense. I think what happened is you had a very sophisticated seller of these things, and some people who were just learning their way making the decisions about how to utilize them. I think that perhaps with more guidance from the state and approval from the state and some better education that some forms of these can still be useful. I think they were much overused from what I can tell.
Q: What about the conflict of interest here with Morgan Keegan acting as adviser and underwriter?
Bredesen: I think that, in retrospect, has obviously been a problem and an issue. I do know from back then when this was originally put together that they were having difficulty finding people who wanted to give this advice because someone who's a professor in a business school is not likely to want to incur the kind of liability obligations that come with going out and advising on these kinds of things, but there clearly has to be something different. It is a problem to have the same person doing the advising and then selling the products to them. I think that really is probably at the core of what went wrong here.
Q: Is the state obligated to bail out these cities?
Bredesen: I don't think we're obliged to bail them out. Look, the municipalities are only a creation of the state and we have a stake in making sure they're well run and remain whole but I don't think it's gotten to the point of bailing any of them out.
Q: Have any of these cities been in contact with you?
Bredesen: They have not contacted me personally that I'm aware of. I'm sure they've been in contact with things like the comptroller's office to find out what the options are. What's happened with these municipalities, it's not stupidity on anybody's part. These are some of the same decisions made by huge banks being run by very sophisticated people. But in retrospect, they incurred more risk than they should have, just as is true of a number of major banks, investment banks in the country here, and we'll certainly work with them to try to work through it.