The more time passes, the more skeletons emerge from the closet. So what’s the punishment for an industry that has literally destroyed countless communities across the American landscape? Trillions in taxpayer bailouts and even more control over our government. They say “it would’ve been much worse without the bailouts.” Tell that to Detroit. From Bloomberg:
The only winners in the financial crisis that brought Detroit to the brink of state takeover are Wall Street bankers who reaped more than $474 million from a city too poor to keep street lights working.
The city started borrowing to plug budget holes in 2005 under former Mayor Kwame Kilpatrick, who was convicted this week on corruption charges. That year, it issued $1.4 billion in securities to fund pension payments. Last year, it added $129.5 million in debt, 9.3 percent of its general-fund budget, in part to repay loans taken to service other bonds.
“We have no lights, no buses, poor streets and now we’re paying millions of dollars a year on our debt,” said David Sole, a retired municipal worker and advocate for Moratorium Now Coalition, a Detroit group that fights foreclosures and evictions. “The banks said they need to be paid first. But there is no money.”
The debt sales cost Detroit $474 million, including underwriting expenses, bond-insurance premiums and fees for wrong-way bets on swaps, according to data compiled by Bloomberg. That almost equals the city’s 2013 budget for police and fire protection.
As banks were collecting fees from bonds, some targeted city homeowners with subprime loans that led to foreclosures, depressing real-estate values and tax revenue, Sole said.
Last year, Detroit’s water and sewer utility borrowed to pay more than $300 million to unwind swaps.
The only thing that has recovered is Wall Street’s parasitic business model. They will never stop until they destroy the entire country.
Full article here.
In Liberty,
Mike
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No love for the wall st banks here but they didn’t make Detroit run a corrupt, union infested, political hacktocracy… they only helped them with enough rope, so to speak.
No, you are quite right. But from the point of view of the wronged Detroit citizen, whose ox was gored by both the government and the banks, there is an action to be brought, an injustice to be addressed, agreements to be vacated, individuals to be imprisoned–clear as day. Unfortunately, there is prosecutorial/law enforcement agency in America at any level that sees the Rape Of Detroit as a crime. (No, I don’t believe that last sentence is either unfair or hyperbolic.)
Detroit is reaping what it has sown, the corruption is worse than you can imagine. Ask anyone who grew up in Detroit or the suburbs and they can talk for days about the incredible mismanagement and outright theft. Most Detroiters havent paid Property taxes in 20+ years and the city never defaulted on their houses. If you cant pay your water or heat bill the City of Detroit just raised the prices on the Suburbs to compensate. Every problem in Detroit is because of the corruption and sloth of the Political class. NOT WALL STREET. Coleman Young, Kwame Kilpatrick and their cronies in CIty Hall are the problem. NOT WALL STREET
WALL STREET IS NOT THE ISSUE. It was Coleman Young, Kwame Kilpatrick and the City Council for the last 40 years. Ask anyone who grew up in Detroit or the Suburbs and they can talk for weeks about the corruption and ineptitude. There are people who havent paid property taxes in 20+ years yet the city never tried to collect or foreclose. If you didnt pay your heat or water bill the City just increased prices on the Suburbs. Detroit is reaping what it has sown for the last 40 years. ITS NOT WALL STREET