On March 10, Spitzer publicly acknowledged wrongdoing. Less noticed that same day, shares of Bear Stearns, a financial institution with major exposure to sub-prime mortgages, began a week long decline in share price.
By this weekend, the Federal Reserve brokered a bailout at a shocking $2 a share to preserve the stability of markets. In two days alone, $4.5 billion in equity had vaporized.
Because of the effect on the stock market, the short-term implications for Connecticut’s budget will likely be losses in our pension fund investments.