Welcome. Im director of the state library of pennsylvania. You are sitting currently in the library which is in the process of being restored back to its original grandeur from when the building opened in 1931 and lets look at the beautiful murals. They are falling apart. The existence in 1745 and purchased the first set of the books and they are still in the folks downstairs. At some point if you would like to take a tour we do ask its done when you have an open house. One basic housekeeping thing what you put your cell phone at least on silence or preferably turned off. We all know that if youre taking when you hear a cell phone ringing in the middle of a speech. Today we are welcoming the author of a narrative Nonfiction Book called capital murder which was released may 12 this year. Hes currently an Investigative Reporter for abc news affiliate in washington, d. C. Before that he spent four years in harrisburg covering the extraordinary financial collapse. Now he has released a book sharing his experiences while detailing what went wrong. Capital murder is a cautionary tale of what can happen when the government is not adequately monitor. It portrays in vivid detail how life deteriorates under the inept or dishonest administration. Every municipality in america should understand what happened to harrisburg to avoid a similar fate. We must ensure that what happened to come into any other city. That is why the book was written. Please join me in welcoming. [applause] thank you everybody for coming out on what might be the greatest weather day of the year id really appreciate it and the reason that i wanted to come here today is because of the significance of what happened in harrisburg pennsylvania. Over the past 30 years it hasnt been reported. People were not telling the stories about what was going on in the city and how it grows from a really bad decade before that becoming a city that had to file for bankruptcy. On october 11, 2011 harrisburg pennsylvania did something no other capital city in this country had ever done before and in doing so, the city we captured by historical significance that it once had. Theres not that much Big National News that comes out of harrisburg pennsylvania and some say that is a good thing if no news is good news but it also means that the influenza in the area it doesnt have the significance that what is more news working out of the area. Here is byrd used to be significant in america. I get a bunch of examples in the book how harrisburg forged the way that america moved forward with steel and railroads throughout the industrial revolution. And i tell one story where during the civil war the general robert e. Lee marched his army of Northern Virginia twice trying to invade the north first he was stopped in antietam and the second time he tried it he was stopped in gettysburg. Both times he was coming here to harrisburg. It was the heartbeat of this country that centered here and send the goods and materials into the product, the soldiers for the civil war and generally knew if he could get here and disrupt the railroads which are just half a mile from where you are sitting now, if he could do that he could suffocate the north. But that is the sixth against it once had. Theres not really anybody alive today that saw the significance of the city. But on that cold october night, harrisburg reclaimed a part of the dickens when it became the First Capital city ever in america and still the only capital city to file for bankruptcy. This isnt supposed to happen in a capital city. They are supposed to be recession proof and thats why its never happened before. They are sending their tax dollars to harrisburg and you have tens of thousands of people coming into the city every day to work for the state. People that are paying taxes and biting parking spots and buying food and gas and groceries. Harrisburg like other Capital Cities have this economic driver but its supposed to prevent economic catastrophes from happening. Thats why no capital city has ever filed for bankruptcy except for this one so how could that financial infrastructure have such a significant financial problems. Thats why a road capital murder because people in america need to learn. We need to learn what happened to so it doesnt happen to more of the cities. More of the cities go through but harrisburg went through not just the people inside of the cities. It has other effects in the Municipal Bond market for owning mother to other money to other cities. Thats going to affect the municipal Interest Rates for many other cities. This isnt just about harrisburg pennsylvania. This is about america. So inside of the pages of this book it took me four years to write this. For years to write this book and enough time i hope i captured what the city did wrong. And others can learn from it so i think in the speeches a lot of people ask me why is it called capital murder trade weighted yugo with the term murder terri and during my four years i investigated what was happening in the city and it was clear to me that this city was financially murdered. But apparently nobody cause the death because the whole time i worked here and up until this book came out there have been no charges. Thereve been no indictments or signs. The people that drove the city into bankruptcy faced no accountability, none. I thought that was wrong. The people in the city suffered when their government failed them. We are going to get into some of the examples of how people suffer when the government fails them but the people here suffered, and nobody was ever held accountable for that. After the book came out, which we will go into a little bit later to historical significance took another giant leap. This just happened a short while ago and we will get into that at the end of the book at the end of the talk. So, the first thing i want to do is introduce you to the main character in this book, and also in harrisburg in general. This is when he was inaugurated, 1982. He ended up being the mayor for 28 years. For seven terms he led the city to 2010 from the time he was 32yearsold he left office when he was 60yearsold. This is a man that took over the city that nobody else wanted to lead. Throughout the 70s, harrisburg pennsylvania lost 25 of its population and 25 of the population is a 25 of people that could afford to leave, leaving behind a 75 of the population that couldnt afford to leave and when the 25 leftparen if they took with it their tax dollars. They took the resources, they took their Intelligence Committee took with it what would make the city thrive left with the 25 . You combine that with the railroad that had already collapsed and the manufacturing was gone and now 25 of the population is gone in 1982 when he came into office it was rumored the bankruptcy papers were left on his desk when he took office because the city was dead. And i think if you look at the financials at that time you would agree that it was probably dead. 28 years later he is still the mayor. How did that happen . Steven reid i believe absolutely loved the city. He wanted the city to be great. He wanted the city to reclaim the historical significance that it once had. I compare him to bernie made off. Bernie made of wanted his investors to succeed. Bernie made off onto his investors to get rich. He wanted them to be prosperous. He didnt want to get caught. Bernie made off didnt want to get caught created they were both willing to do whatever they have to do because they were focused on their objective. It looks like steven has stephen has been caught after this book came out and we will get to that a little bit later. But what he ended up doing is when he came into office in 1982 as i said, the city didnt have much of a tax base so he had to use what i call financial tricks, accounting tricks. He had to find ways to get to the city and then he would take that money and reinvest in the city. I will give you a couple examples. In the early 80s he borrowed 300 million, 300 milliondollar a 300 milliondollar loan came into the city to build across the river a halfmile wide beautiful giant river. You didnt see the hydroelectric but that got blown to the city. 300 million. He had no intention of ever building the dam. The people signed off on the loan and there was no intention of ever building the dam. The intention was to reinvest the money and as the reinvest the money there are fees that are paid out its called arbitrage and they are paid out he would take the money from those fees and thats one of the ways he would get the money to funnel back into the city. Now, arbitrage has since been made illegal. You cant do that anymore. So they would get money from the city and most of it involved the Municipal Bond market working with him and wall street getting wall street bankers and the attorneys and the accountants, the consultants to load the city money and in the process he would keep scraping off the fees and he would use those to reinvest back into the city and he kept taking chances and as he became more powerful and as he kept getting reelected over and over again the chances that he would take the risk became greater on so there was a final risk that he took that was something that should not have happened and ended up bankrupting the city. During his time that he was the mayor, wonderful things were happening in the city. Again in 1982 when he took over the crime was high in taxes for the tax revenue is low and the morale in the city was low and he was able to turn the city around. He was the best mayor in america and the third best mayor in the world. He was doing the things that nobody understood what was happening to the city. I only met him three times in the four years ive worked here as much as i chased him around i only had three encounters with him via they are detailed in the book because all three of them led lead to a better understanding for me and how the city got to where it was but also its lead me to if led me to a better understanding of how he saw his role in the city and the first time i met him was was in the National Civil war museum for the tenth anniversary of the me with the him and he had explained to me his philosophy when he was running in harrisburg, and it involved institutions. What he said to me was when i took over here is burkett had no institution. There is nothing here to draw people here so he created those institutions. The more people moved into the city at its start a Snowball Effect and that was the way that he operated the city and during the time that he was here, much of what you see a round of the city is a beautiful result of him. The civil war museum, the Pennsylvania National firemens museum, harrisburg university. He created all of these institutions using a lot of these financial tricks, reinvesting that money back into the city that he was getting through the Municipal Bond market, most of it, with the lawyers and wall street that he was getting very, very cozy with. And they were more than willing to loan him this money even if a certain percentage of that money that was being loaned wasnt going to the project that it was originally loaned for. Downtown harrisburg, second street, restaurant row, block after block of restaurants and bars. All of that was steven reed. People started coming back into the city. As i said, this the 1970s 25 of the population left this city. Two decades after he was the mayor, the population started going up again. A remarkable turn of events. And thats why he was winning all these accolades, and thats why nobody was even running against him when he was up for reelection. Multiple times he would get the republican and the democratic nomination. I say in the book, and i firmly believe, steven reed became a dictator. Nothing in this city could get done without stephen reeds blessing on it. If you wanted to be a member of city council, youre not going to get on city council unless steven reed, the mayor for life, unless he supports you. If youre on city council and you dont do what the says, he doesnt support you for reelection, and you lose. If you want to be the treasurer, if you want to be the comptroller, you dont get to those positions unless he supports you. If you want to open a business in harrisburg, you cant open businesses without his support. You cant do anything in this city without steven reeleds support. Reeds support. And the people allowed it to happen, happily allowed it to happen. He was winning reelection by incredible margins, especially when nobody was running against him. The people saw what he was doing, they saw these institutions, they saw what the city was in the 70s and early 80s, and they just believed in him. And they believed that everything that he was going to do was in the best interests of this city. The news media allowed it to happen. News media was not holding him accountable, and that was one thing that, that really troubled me when i got here as a member of the cbs affiliate. The television stations and the newspapers here just let him do whatever he wanted. And people knew what he was doing. It was no secret. People knew what he was doing with the bond market. Im sure a lot of you have heard about the artifacts that he was buying and the artifacts that he was selling. Those werent secrets. That was just steven reed. Hes got the best interests of the city at heart. Steven reeds not going to do anything to hurt this city. Hes going to help this city. And thats the way that a lot of people here looked at it. So to give you a little bit of background, im from pennsylvania. I grew up about an hour east of here, about 45 minutes, 50 miles west of philadelphia in a little town. And when i was growing up, harrisburg was this was not a city that you came to. Throughout Elementary School and middle school a lot of times when youre kids, you go to the local capitol to learn about government, to learn about how the municipal processes work, to meet your legislatures. We never did that when i was a kid. This was a city that you just avoided because of the crime and because of the blight. It wasnt a place that you would bring kids. So in september of 2010 when i came to harrisburg to work, i went from i got, i graduated from university of pittsburgh, got my masters at temple. I flew out to wyoming, i worked in wyoming for two years, i worked in madison, wisconsin, for three years, and then i moved back to harrisburg. And when i came back here, i couldnt believe what i saw. I saw a thriving city. Again, this was in 2010, a year before the bankruptcy. Thats how fast be this entire thing imploded. But i saw a thriving city. I saw a bunch of Young Professionals walking around. I saw new buildings, new highrises, a bunch of new businesses, trendy shops. None of this was here when i was growing up 20 years earlier, none of it. I couldnt believe it. It was great for me to see. I mean, pennsylvanias my home state. I wanted to see pennsylvania do well, i still do. I wanted to see harrisburg thrive, and it looked like it was thriving. Now, when i got here, my news director had said to me that it looks like harrisburg is going through some financial issues. We dont know what those issues are yet, we dont know how bad its going to be, but i had been a reporter in madison, wisconsin, which is another capital, and i had done a lot of capital reporting, and he said i need someone here just in case. So i said, okay. It was like a homecoming for me too. But nobody knew what was going to unfold over the next three years. And it was, it was something that i could never have predicted, and i dont think anybody could have ever have predicted what was really going to happen. And after four years and more than 200 reports on this city, i decided that i was going to write this book to try the teach people what happened in harrisburg in the hopes that other places, other cities wont go down the same path. So this is a be picture of young steven reed. Hes probably about early 30s here. This is soon after he became mayor of harrisburg. And you can tell its the early 80s, the glasses and the haircut. [laughter] and he was ambitious. People loved him. Hes a guy that when you meet him, hes a very friendly guy, very warm. The type of guy that in a Group Setting he can headache you feel like hes make you feel like hes having a oneonone conversation with you. Hes incredibly articulate, very nice guy, very nice smile, just a very warm way about him. And this picture oops, hold on. That picture is steven reed about the time that he left office. So you can see from here to there that those 28 years, they were rough on him. And its also amazing to me to think that, i mean, 28 years is most of his adulthood that he spent in one job in the public running a city. And this was a man that many people thought was going to end his political career in the white house. Before he even became mayor of harrisburg, he had served three terms in the state legislature and had already been a county commissioner. By the time he was 32. A lot of people thought that his magic number was 84, 1984, the first or year that he could run for president. Most people couldnt even understand why he would want to even be the mayor of harrisburg in 1982. So back on october 11th, back on the day the city council declared bankruptcy, i was in the room covering that City Council Meeting when harrisburg declared bankruptcy. And you really need to understand the scope of what was happening here. Harrisburg was falling at an incredible rate financially. They were no longer paying their bills. They were no longer paying their debtors. They were no longer paying their workers. They slashed a massive amount of government jobs, the police, the firemen. Nobody knew where their next paycheck was going to come from. The city had tried all different types of way, selling tax liens, taking money owed to it early just to get enough money to pay its workers. And at this point it wasnt paying any of its debt. Its general obligation debt, which is like the mortgage of a city that they use to buy fire trucks, police cars, it wasnt paying that debt. It went paying anything it wasnt paying anything. And wall street was really concerned, because wall street had hundreds of millions of dollars in debt that steven reed took out tied up in this city. Wall street wanted its money. Wall street didnt care if police got cut and the crime rate spiked. Wall street didnt care if firemen got laid off and they couldnt fight fires as well. Wall street didnt care if taxes went up on the impoverished people of harrisburg. They didnt care if parking got more expensive. They didnt care if trash collections got more expensive. They didnt care what happened to the people of harrisburg, they wanted their hundreds of millions of dollars. And on