You can move from New York City to Colorado, but it seems you can never escape the all encompassing tentacles of Wall Street parasitism and theft. I recently covered a similar situation back in March in my piece Wall Street: $474 Million, Detroit: 0. In both cases it seems clear that public officials had no idea what they were getting into and there was a great deal of irresponsibility, but that is beside the point. It’d be one thing to say these communities should suffer the consequences of their actions if Wall Street had to as well, but we all know that isn’t the case. So it is highly immoral and culturally destructive to say it’s ok that Wall Street gets bailed out from all their mistakes and then is able to turn around and impose austerity on everyone else. That’s the way America works today and we can thank Ben Bernanke and Barack Obama for that reality. We must never forget the enablers in chief of all of this. Oh, and did I mention that the $216 million paid by Denver represents two-thirds of annual teaching expenses? USA! USA!
From Bloomberg:
Wall Street banks collected $215.6 million that Denver’s public schools paid to unwind swaps and sell bonds since the district began borrowing to cut pension costs in 2008. That sum is about two-thirds of annual teaching expenses.
The district paid $146.6 million last month to banks, including RBC Capital Markets LLC, Wells Fargo Securities LLC and Bank of America Corp., to end interest-rate swaps as part of a second attempt to restructure a 2008 borrowing, bond documents show. The April 17 deal sold as the district’s property-tax rate has risen 26 percent in two years to fund education.
Municipal borrowers from Detroit’s utilities to Harvard University in Cambridge, Massachusetts, have paid billions of dollars to banks to end privately negotiated interest-rate bets sold as hedges. The Federal Reserve’s policy of holding its benchmark borrowing rate near zero since 2008 has turned many of the swaps into wrong-way bets.
The Federal Reserve works for Wall Street. Period, end of story.
Denver’s schools might have avoided borrowing if elected officials had adequately funded pensions, according to a draft study for Princeton University’s Woodrow Wilson School of Public and International Affairs by Joseph Fichera, chief executive officer of Saber Partners LLC in New York. To fill the gap, officials chose complex financings sold by Wall Street instead of raising taxes or renegotiating benefits, he said.
Denver schools wound up doing a bond deal in 2011, along with last month’s, to convert the 2008 bonds to fixed-rate and exit swaps. The $215.6 million paid to unwind swaps as well as fees for new bond sales has eroded money the district set out to save for its pension plan. Besides the swap termination payments, the cost includes fees to underwriters and other professionals.
“We’ve lost hundreds of millions of dollars on deals we never should have been in,” said Jeannie Kaplan, a district board member who said she voted for the 2008 borrowing and then began pushing to end it in 2010. “Public institutions with elected boards shouldn’t be in these kinds of transactions. Our responsibility is to use the public’s money in a judicious way.”
The payment “will affect the classroom,” Kaplan said.
MacPherson said the borrowings will add $1 billion to pension costs over the life of the loans compared with a scenario where the district had just merged its pension plan into the state system.
“This deal hasn’t done much for anyone — except the bankers, who are dancing in the streets,” said MacPherson.
Yep, they’re still dancing…and it will be you who pays for it when they collapse again.
Full article here.
In Liberty,
Mike
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Who Is Profiting From Charters? The Big Bucks Behind Charter School Secrecy, Financial Scandal and Corruption What we know about the financial incentives offered by charter schools.
Hedge Fund Managers and Real Estate Developers
As AlterNet has previously reported, two little-understood policies helped pave the way for the kind of charter growth we are seeing today. One, called the New Markets Tax Credit (NMTC), began in 2000 at the end of President Bill Clinton’s administration.
And what precisely is the NMTC doing to restore these so-called “blighted communities”? It’s providing hedge fund managers and wealthy real estate investors with opportunities to cash in on the charter school boom.
But you don’t have to be a citizen, resident or domestic business executive to get a break from the federal government when you invest in charter schools. Since the Immigration Act of 1990, investors have had the opportunity to purchase visas for their families by investing in hotels, ski resorts and you guessed it — charter schools. It’s called the EB-5 visa for Immigrant Investors. That’s right, wealthy foreigners can contribute just $1 million toward urban charter school development — or $500,000 to a rural area or area with high unemployment — and get visas for the whole family.
http://www.alternet.org/education/who-profiting-charters-big-bucks-behind-charter-school-secrecy-financial-scandal-and?paging=off
The school systems are over by design………….
And not even a ‘Rasta-Banana’ to show for it.
2 scorpions in a bag. The lenders and borrowers deserve each other and I have no sympathy for either.
Thank you come again