Idaho state Treasurer Ron Crane says he will seek a fifth term in the elected post; the news came as he answered questions from reporters this afternoon about a sharply critical state audit of his office’s investment practices that he disputes. “If there was a problem, we’ve fixed it, we’ve addressed it,” he said.
Asked when he planned a formal announcement of his candidacy, Crane, 65, said, “I’ve had bigger fish to fry – I haven’t focused on that.” Crane was first elected state treasurer in 1998; prior to that, he served 16 years in the Idaho Legislature as a Republican representing Canyon County. He started Crane Alarm Service in 1979 after working for six years in banking and serving in the Idaho National Guard, and holds an associate’s degree from Bible Missionary Institute as well as an honorary doctorate he received from Ohio Christian University in 2008.
Crane defeated then-Ada County Treasurer Barbara Lois Bauer and longtime banker Trudy Jackson in the GOP primary in 1998, and then was unopposed but for a third-party candidate in the general election, in which he took 75.5 percent of the vote. He was re-elected with 61 percent of the vote in 2002 and 64 percent in 2006, and was unopposed for his fourth term in 2010. Click below for a full report from AP reporter John Miller on the latest on Crane and the audit.
Treasurer: Inadequate controls in office remedied
By JOHN MILLER, Associated Press
BOISE, Idaho (AP) — Treasurer Ron Crane Monday rejected auditors' conclusions that he heaped financial risk on Idaho taxpayers by transferring tens of millions worth of troubled mortgage-backed securities to state accounts in 2008.
But Crane, a four-term treasurer, acknowledged Monday that his office six years ago lacked adequate controls on decision-making, leaving too much power with individuals.
Legislative Services auditors last week issued a report saying Crane's office fell short of its duty to protect the state's money. Idaho has already lost $10 million, and it faces more than $14 million in unrealized losses from the 2008 transactions.
Now, however, Crane maintains he has bolstered the team that invests Idaho's money and insists the inadequate controls are history. He made the comments in an hour-long afternoon interview in his office with reporters where he gathered seven of his office's employees to help explain and defend his handling of investments.
“We've fixed it. We've addressed it,” Crane said. “I'm very proud of the direction we've made, the restructuring we've made.”
Crane, first elected in 1998, said he plans to seek a fifth term.
On Friday, state auditors released the report concluding his office inappropriately transferred mortgage-backed securities with a total face value of $86 million from an investment fund he oversaw for local governments, called the Local Government Investment Pool to an account that he manages for state agencies known as the Idle Pool.
Crane made the shift after the ratings agency Standard and Poor's warned him it was considering a downgrade of the local government fund, barring action to improve its balance sheet.
Among other things, however, auditors criticized Crane's office for exchanging the securities at their face value, rather than their lower fair market value, at the time of the transactions.
The difference was nearly $20 million at the time.
Crane's office sold the securities last year, resulting in a $10 million loss.
“This is an exchange transaction that should have been handled at arm's length (and) should have had adequate internal controls in place to protect the interests of both parties,” auditors wrote. “The transactions were completed at amounts in excess of fair market value.”
At Monday's afternoon meeting, Crane insisted the state auditors' critical report didn't properly consider that securities transfers between the local government and state accounts — at their face value, not their market value — were common and perfectly appropriate, according to his office's rules.
Though Standard and Poor's was considering a downgrade as the value of the homes pledged as collateral for the mortgage bonds plunged, Crane today insists that only with hindsight's benefit can anybody today conclude his office disregarded its fiduciary duty.
His investment manager at the time, Liza Carberry, assured him the mortgage-backed securities would continue to perform as they had in the past, irrespective of Standard and Poor's concerns, he said.
“All the risk that I was aware of was that the rating of the Local Government Investment Pool … and there was no downside to the Idle Pool,” Crane said. “So that's why it made sense to me. Looking back, of course, hindsight is 20-20.”
April Renfro, a certified public accountant who oversees Idaho's Legislative Audits Division, says she stands by her auditor's report.
Additionally, state Sen. Dean Cameron, R-Rupert, has suggested Crane's office needs additional oversight to protect against similar transactions occurring.
On Monday, Cameron was still seeking clarification from Crane on why he denies his office did anything to expose state taxpayers to undue risk, while simultaneously protecting the local government fund from losses from the mortgage bonds.
“I still have concerns,” Cameron said. “Am I satisfied? No.”
Copyright 2014 The Associated Press