State loses over $20 million in bond sale: Governor’s arrest shows cost of corruption: "The legal problems surrounding Gov. Rod Blagojevich have already cost the state more than $20 million, Illinois State Treasurer Alexi Giannoulias said today.
The state was forced to delay its plan to borrow $1.4 billion last Thursday as a result of the governor’s arrest and missed the chance to sell short-term bonds at reduced interest rates.
News of the governor’s legal situation, a rating downgrade and market volatility drove up the interest rate by several percentage points on the bonds sold today."
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As the financial situation of a state or local government worsens, their bond rating goes down, and that increases the interest rates they have to pay on the bonds they issues. So there is a slippery slope, and Illinois is on it.
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