The Denver Business Journal is out with a new story on the least covered scandal in the last decade — then-DPS chief Michael Bennet’s risky pension bail-out that cost Denver Public Schools millions.

From the DBJ:

Denver Public Schools has quietly put the rest of its controversial variable-rate bonds with swaps on the market to sell as fixed-rate debt.

Five years after issuing a 30-year, $750 million school pension bond that turned into a financial quagmire for the district, DPS is selling $519.8 million in fixed-rate, refunding certificates of participation (COPs), set to price during the week of April 15, according to an announcement Friday from Fitch Ratings.

…Based on the fact that the district is issuing nearly $520 million in COPs this month to fix out the remaining $396 million debt, it would indicate that DPS is paying about $124 million in swap termination fees.

The district didn’t issue a press release about the bonds.

For those who missed or have forgotten the details on this salacious episode, here is a refresher from the 2010 New York Times story:

To members of the Denver Board of Education, it sounded ideal. It was complex, involving several different financial institutions and transactions. But Michael F. Bennet, now a United States senator from Colorado who was superintendent of the school system at the time, and Thomas Boasberg, then the system’s chief operating officer, persuaded the seven-person board of the deal’s advantages, according to interviews with its members.

Rather than issue a plain-vanilla bond with a fixed interest rate, Denver followed its bankers’ suggestions and issued so-called pension certificates with a derivative attached; the debt carried a lower rate but it could also fluctuate if economic conditions changed.

The Denver schools essentially made the same choice some homeowners make: opting for a variable-rate mortgage that offered lower monthly payments, with the risk that they could rise, instead of a conventional, fixed-rate mortgage that offered larger, but unchanging, monthly payments.

The Denver school board unanimously approved the JPMorgan deal and it closed in April 2008, just weeks after a major investment bank, Bear Stearns, failed. In short order, the transaction went awry because of stress in the credit markets, problems with the bond insurer and plummeting interest rates.

Since it struck the deal, the school system has paid $115 million in interest and other fees, at least $25 million more than it originally anticipated. 

To avoid mounting expenses, the Denver schools are looking to renegotiate the deal. But to unwind it all, the schools would have to pay the banks $81 million in termination fees, or about 19 percent of its $420 million payroll.

What was then peculiar — and what is now obvious — is the exact reason why The Denver Post refused to print the story before the NYT broke the scoop. We now know that the Post‘s Allison Sherry, who is romantically linked to Bennet’s 2010 campaign spokesman, had good reason to ignore the scandal — it would have done serious damage to Bennet’s campaign.

The story came too late in the campaign to have a major impact. It was published by The New York Times on August 5, weeks after ballots had been mailed out for the U.S. Senate Democratic primary between Bennet and Romanoff.

And it wasn’t until the Times broke the story that the Post came around and wrote up Bennet’s role in the flawed transaction.

Romanoff’s ad hitting Bennet on the failed deal, entitled “Big Casino Bet Gone Bad” has been removed by Romanoff’s campaign from YouTube, possibly in thanks for Bennet’s begrudging endorsement of Romanoff in his CD6 bid this cycle.

At the time, Romanoff was none-too-kind to Bennet for his financial failures that cost Denver Public Schools serious amounts of money.

In a series of interviews Friday, Romanoff questioned Bennet’s financial expertise, saying, “When you lay out the whole picture, it is disturbing the risks they took with our tax dollars.” Bennet touts himself as a turnaround expert, Romanoff added, “but when people actually raise questions about the details, he attacks them.”

We don’t suppose any enterprising political reporter would like to get Romanoff’s take on the latest news in this massively under-covered political scandal?