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Thursday, May 14, 2009

Hannan / The Economy Show Your Bones: Tennessean Profiles State's Biggest Bond Daddy

Posted by Caleb Hannan on Thu, May 14, 2009 at 6:14 AM

click to enlarge Shouldn't you always be suspicious of a dude who calls himself "Bones"?
  • Shouldn't you always be suspicious of a dude who calls himself "Bones"?
Now that we've accused them of unfairly deflavorizing our fair city, a belated kudos is in order for the Tennessean. On Sunday, reporter Brad Schrade profiled Charles G. "Bones" Seivers, president and CEO of the Tennessee Municipal Bond Fund, one of the state's biggest lenders to local government. Schrade's investigation revealed that Seivers' fund won't disclose his income nor his possible conflicts of interest, sometimes charges customers (i.e. cities) hidden fees and has some incredibly shady pay-for-play arrangement with Bank of America. What's more, during his investigation, Schrade found that TMBF had overcharged Nashville and Murfreesboro to the tune of nearly $40,000. A fact which Sievers first disputed before cutting the two cities checks. (And BTW, lest you think it a little weird that a lender would just return money to a client without them asking for it, rest easy: Metro finance director Rich Riebeling thought the same thing and promises he's making them redot their i's and recross their t's as we speak.) So obviously bonds are incredibly unsexy. But Schrade's article makes us two-for-two when it comes to monthly revelations about municipal lending in Tennessee. In April there was the New York Times article on Seivers' biggest competitor, Memphis-based Morgan Keegan, who for the past decade or so have been practicing the art of deceptive haberdashery, wearing multiple hats as sellers, advisers and consultants to small towns who are now going bankrupt on account of the risky bonds sold to them. So what's going on here? Will this be the last we hear on Seivers and Morgan Keegan? Or is Tennessee, the second-largest bond trading outpost outside of New York, headed for another golden age of scurrilous rich guys like the infamous "bond daddies" of the '60's and '70's, the notorious group of lenders who used underhanded tactics to sell tax-exempt bonds to the elderly and lived large off the profits? (Or Option C, is all of this too complicated and uninteresting to hold your attention and we should just stick with fainting goats? Discuss.)

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You are totally going to have to figure out how to take credit for the phrase "practicing the art of deceptive haberdashery" because it is beautiful and everyone who writes about this issue would be a fool not to steal it and use it. Is it too late to trademark it?

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Posted by Aunt B. on May 14, 2009 at 7:30 AM

Bonds are damned sexy. Just like hedge funds and derivatives. Good one. These sharks assume little people can't figure out what they're doing and so they rape and pillage with impunity. Sometimes, though, happily, they jump the shark--like Bernie Madoff.

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Posted by stellabardo on May 14, 2009 at 8:53 AM

"Bones" under-handed dealings and power plays are all too familiar with the folks in his hometown of Clinton. He's still considered a god-like creature here but only to the people who fear him or who owe their jobs to him. He once was Clinton's City Manager and decided the salary he set for himself. It was more than the city father of Memphis! 9000 people vs. what? 600,000? His niece was appointed Phil Bredesen's Education Commissioner but for some strange reason decided to leave for a similar job in Mississippi. Wonder if she saw something coming? I've said before that his sins will find him out. Let's hope his pal Al "global warming" Gore doesn't help him get out of this little jam first.

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Posted by whatsupnow on May 14, 2009 at 10:49 AM

I'm a little ignorant on trademark law, B. But I'm pretty sure that anyone who uses the term owes me a shiny silver dollar.
Two more things.
1) Looks like Schrade and the Tennessean aren't done:
http://business.nashvillepost.com/2009/05/13/fye-on-west-end-closed-briefly-over-tax-mistake/
2) And within that link you'll find another nugget. Seivers just bought himself some new PR.

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Posted by Caleb on May 14, 2009 at 10:56 AM

Seivers has used a governmental non-profit as a personal wealth building entity for himself, his family, and his special friend. He is a morally and ethically corrupt individual. Sadly, there are those who will defend his practices. Interestingly, he and Riebeling are long time allies and friends who did business together while Riebeling was at Fifth Third. Explains why Metro did highly questionable transaction with TMBF.

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Posted by cardinalfan on May 19, 2009 at 6:21 PM
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