Will State and Local Government Investment Pools Get Burned Again? Reports that King County, Washington has taken steps to purchase SIV-lite Mainsail II and SIV Cheyne from the the $4.1 billion King County Investment Pool have raised concerns that some variable NAV state and local government investment pools and corporations, which, like "enhanced cash" funds, sometimes purchase securities that money market funds can't or won't, could be facing small losses. King County (Seattle) says, "Last week, the county took protective steps after learning of downgrades for Mainsail and Cheyne, two commercial paper investments in King County's investment pool portfolio [the ninth largest in the country], which had the potential to impact the pool's high rating. The two investments make up about 2.5% of the investment pool's assets or $103 million," says a release. Concerns have also recently been raised about Orange County's Investment Pool, which went bankrupt in 1994 following a sharp decline in interest-rate sensitive "derivative" securities.

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