SIR — Herts County Council are by no means alone in having a problem arising out of the collapse of Icelandic Banks — the BBC website has a list of all those local authorities and other public bodies caught out. Herts are sadly near the top of losses so
SIR - Herts County Council are by no means alone in having a "problem" arising out of the collapse of Icelandic Banks - the BBC website has a list of all those local authorities and other public bodies caught out. Herts are sadly near the top of losses so could any of this be foreseen - just how cross should we be as council tax payers?
Perhaps it is an illustration of how widely the impact has been felt that the Audit Commission, responsible for auditing local authorities, has not been spared. The BBC has them as losing £10m.
I looked at Herts County Council's report and accounts for 2007/08 - bound to have something on treasury management and details of investments.
Sure enough, note 32 sets out quite a bit, including for illustrative purposes how money was invested with AAA, AA and A banks - the Icelandic banks being the lesser A-rated variety. Roughly speaking at the close of the year £10m was with the top-rated AAA banks, £100m with AA banks, and £200m with A banks.
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There is a measure of risk too, so that readers of the accounts can assess the "estimated maximum exposure to default" from these investments based on typical market behaviour. I expect that note has been faithfully constructed each year with no-one believing losses were actually likely - but the maths was done just the same.
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