banksters doing g work:
--Too Big to Trust? Banks, Schools and the Ongoing Problem of Interest Rate Swaps
Philadelphia, like many cities, has faced serious financial difficulties in recent years...trimmed almost $100 million off its budget during 2008 and 2009, and the school district faced a $629 million budget hole just this year, which was closed by laying off teachers and cutting programs for students.
...As the Financial Crisis Inquiry Commission concluded, “Too many of these [large financial] institutions acted recklessly, taking on too much risk, with too little capital, and with too much dependence on short-term funding.”
...beginning in 2003, Pennsylvania school districts and municipalities began to use...interest rate swaps and swaptions...that put them on the wrong side of declining interest rates and led them to pay out millions of dollars to investment banks
...The city and school district have lost $331 million in net interest payments and cancellation fees relating to swaps negotiated with bailed out financial institutions such as Wells Fargo, Morgan Stanley and Goldman Sachs, as well as other banks; and the city could potentially lose more than $240 million in additional net interest payments from still-active swaps between the city agencies and the same financial institutions if interest rates continue to remain low.
These financial institutions have profited, while Philadelphians have paid the price through lost city services, lost jobs, and lost school programs. The financial institutions, on the other hand, have returned to profitability with subsidies from taxpayers—including Philadelphia taxpayers—and with multimillion-dollar contracts with the city. Moving forward the banks should respond as good corporate citizens of Philadelphia, by refunding a portion of the lucrative cancellation fees they received for terminating bad deals and renegotiate those deals which are currently active.
pennbpc.org |
