Wankers Of The Decade

1 comment November 23rd, 2009at 07:18am Posted by Eli

These sons-of-bitches have actually managed to make Enron look like a bunch of two-bit pickpockets:

Detroit Mayor Dave Bing is struggling to save his city from fiscal calamity. Unemployment is at a record 28 percent and rising, while home prices have plunged 39 percent since 2007. The 66-year-old Bing, a former NBA all-star with the Detroit Pistons who took office 10 months ago, faces a $300 million budget deficit — and few ways to make up the difference.

Against that bleak backdrop, Wall Street is squeezing one of America’s weakest cities for every penny it can. A few years ago, Detroit struck a derivatives deal with UBS and other banks that allowed it to save more than $2 million a year in interest on $800 million worth of bonds. But the fine print carried a potentially devastating condition. If the city’s credit rating dropped, the banks could opt out of the deal and demand a sizable breakup fee. That’s precisely what happened in January: After years of fiscal trouble, Detroit saw its credit rating slashed to junk. Suddenly the sputtering Motor City was on the hook for a $400 million tab.

(…)

Now Detroit must use the revenues from its three casinos — MGM Grand Detroit, Greektown Casino, and MotorCity Casino — to cover a $4.2 million monthly payment to the banks before a single cent can go to schools, transportation, and other critical services….

Detroit isn’t suffering alone. Across the nation, local governments and related public entities, already reeling from the recession, face another fiscal crisis: billions of dollars in fees owed to UBS, Goldman Sachs and other financial giants on investment deals gone wrong.

(…)

Investment bankers sold exotic derivatives designed to help municipalities cut borrowing costs. Banks and insurance companies constructed complicated tax deals that allowed public utilities, transit authorities, and other nonprofit organizations to extract cash immediately from their long-term assets. Private equity firms, pointing to stellar historical gains, persuaded big public pension funds to plow billions of dollars into high-cost investments at the peak of the market.

Many of the transactions shared a striking similarity: provisions that protected the banks from big losses and left the customers on the hook for huge payouts.

Now, as many of those deals sour, Wall Street is ramping up its efforts to collect from Main Street.

“The banks stuffed customers with [questionable investments] and then extorted money from the customers to get rid of them,” says Christopher Whalen, managing director at research firm Institutional Risk Analytics.

Yes, it was foolish for the cities to fall for the same kind of too-good-to-be-true deals that have cost so many people their homes, but that doesn’t come close to absolving the financial predators from their role in destroying large swaths of the country in the pursuit of ill-gotten profit.

But as much as I would love to see these bastards spend the rest of their lives in prison, I’m betting they won’t even be forced to take a haircut on all these bad loans.  Which is only going to reinforce the teabaggers’ conviction that Obama and the Democrats are completely in bed with the Wall Street elites.  Which is actually true, but to a slightly lesser degree than the GOP, which somehow always gets overlooked.

Still, it’s a massive missed opportunity for Obama and his party if they insist on staying on the wrong side of this fight.  This is one of those occasions where the morally right course and the politically popular course are in perfect harmony – it’s practically a freebie.  Unfortunately, campaign donations trump both considerations, or we would have had universal single-payer healthcare decades ago.

Entry Filed under: Corruption/Cronyism,Economy,Wankers

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