Bad Bonds?

Recall that Michigan State University agreed to pay $500 million to victims and associates of Larry Nassar’s sex abuse victims while he was pretending to treat our women gymnasts’ injuries.

Now the school intends to float bonds to raise the money to pay the bill.

Were I an investment advisor—which I’m not, nor do I play one on the radio—I’d advise against buying these bonds; I’m not satisfied Michigan State will be able to pay them off in the end, even with OPM.

Aside from their investment quality, or lack, I also think it’s immoral to bail out the school until there has been a serious cleaning house of school management, from middle management layers all the way up through the top layer.  This house-cleaning must include the athletic department as well as HR, student affairs, extracurricular affairs, and the President’s office.  Especially in the latter and in the athletic department, no one should be left but the secretaries.

And none of this gets to the fact that the bond offering is just a cynical back-door effort to get taxpayers to pay for the school’s failure.  That’s also morally unacceptable.

And this:

[The school] is in talks with its insurers and has said it expects to recover at least some funds through them.

Is the school seriously suggesting that it bought insurance against the risk that its medical personnel would engage in sexual abuse?  I can think of no other way in which insurers would be liable for a payout here.

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