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Behind Ohio’s Landmark Israel Bond Purchase

The unprecedented $42 million buy was led by Treasurer Josh Mandel

Rebecca Meiser
March 08, 2013

At an early morning AJC meeting at the Mandel Jewish Community Center in Beachwood, Ohio yesterday, guest speaker Cuyahoga County Executive Ed FitzGerald was running 20 minutes late. Trying to fill the silence, organizers fished around the room, composed of Cleveland heavyweights like Ohio house minority leader Armond Budish and Alan Melamed, president of Melamed Communications for something to kibbitz about. They didn’t have to wait long before Thomas Lockshin, executive director for Israel Bonds in Ohio and Kentucky shot out of his chair.

“[State treasurer] Josh Mandel just purchased $42 million in Israel Bonds, the largest single government purchase of Israel Bonds in United States history,” he proclaimed excitedly to the audience of 40 -– just before FitzGerald walked into the room.

And although FitzGerald, rumored to be angling for the Democratic nomination for the Ohio governor race next year, talked earnestly about what the county can learn from Israel’s investment in technology and early education, it was Lockshin’s news that everyone wanted to chat about.

It is not unusual for states to invest in Israel bonds — in the last 20 years, 26 states have invested in them, with a total outlay of $2.5 billion, says Larry Berman, the National Managing Director of Corporate and Institutional Sales for Israel Bonds. Generally, they are seen as secure investments. “Israel has never defaulted [on a bond] in 62 years,” Berman says proudly. And the money from the bonds goes to help Israel’s infrastructure.

What is unusual is the amount of money Ohio chose to invest. The $42 million bond purchase, completed March 1st, brought the state’s investment in Israel bonds to $80 million. (By contrast, Illinois and Indiana each bought $10 million in Israeli bonds this year, Berman says. And before Ohio’s purchase of the bonds, no other single bond purchase had exceeded $25 million.) Even local representatives were taken aback by the number. “The final amount was a little bit of a surprise,” Lockshin said in a phone conversation yesterday.

Israel, though, has a strong supporter in Mandel, who is Jewish, and an emphatic defender of the country. As a student at The Ohio State University, Mandel served as a member of the American Israel Public Affairs Committee and in 2008, he married wife Ilana Shafran Mandel in Jerusalem.

Raphael Rothstein, director of communications for Israel Bonds in the United States, admits that Mandel’s love of Israel sweetened the deal for him, but insists the treasurer’s decision to invest was based purely on the bonds’ soundness and security. “The fact that it’s good for Israel is a nice ancillary benefit, but he couldn’t make a decision based on that alone,” Rothstein says.

It was Mandel, though, who paved the way for this investment to happen. Three years ago as a Republican state representative, he co-sponsored a bill with Jewish Democrat Stephen Slesnick that allowed the treasury to increase debt earnings in foreign nations from one-half of 1 percent to 1 percent of the state’s portfolio.
Then in 2011, shortly after assuming the position of state treasurer, Mandel made the largest single purchase of Israel bonds in Ohio history – $18 million dollars. “He was proud to do it,” Lockshin, who worked with Mandel on the investment, said.

Mandel didn’t return calls seeking comment before publication, but in a press office fact sheet about the Israel bonds purchase, he noted that Israel Bonds are an “attractive investment option for state and municipal public funds because they maintain a high credit rating, are dependable, and yield a competitive interest rate” and “the fixed rate Israel Bonds purchased by the Ohio Treasurer’s office in this offering have yields that are three to four times the rates of comparable U.S. Treasuries.”

To Rothstein, the Ohio treasurer’s unprecedented investment “shows a huge vote of confidence in Israel’s economy and in the people of Israel,” he says, adding that “I hope it will encourage and convince other states and municipalities that this is a good thing [to invest in.]”

Rebecca Meiser is a freelance writer living in Cleveland.

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