Illinois Treasurer Judy Baar Topinka is working to implement rules that would require investment guidelines for state and local governmental entities with investment authority.
The push is coming through a task force she helped form that is studying ways to prevent investment losses like those experienced by Orange County, Calif., and for governmental units that owned defaulted Mercury Finance Co. commercial paper.
The Mercury Finance paper was held by some Illinois school investment funds that would have faced losses had the company managing the money - Cadre Financial Services Inc., Ronkonkoma, N.Y., a unit of AMBAC Inc., New York - not stepped in to buy it back, she said.
"We're not always going to have a corporate headquarters picking up the hit," Ms. Baar Topinka said.
As the result of hearings, she said she has found that there are still plenty of unsound investment practices taking place in funds across Illinois. Requiring that funds have written investment guidelines would be a good step in cleaning up some of the practices, she said.
The task force is expected to meet with state legislators before the end of the year to make its final recommendations.