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August 11, 2011

Banks Still Making Money Off Municipalities & Poor

An interesting article in today’s Wall Street Journal shows how shady bond deals throughout the US are still victimizing counties, cities, towns and states.

As the picture indicates, an Alabama county is in restructuring settlement talks that aren’t finalized because of a dispute over helping poor people pay their sewer bills which are dramatically higher to pay for a restructured bond deal push on the municipality by Wall Street.  As one was quoted, “Why should the poor have to pay for the ill-gotten gains of some of these banks who poisoned the well in the first place?” 

The article notes in passing that “several former county officials went to prison because of wrongdoing tied to the bond deal. J.P. Morgan Chase & Co. paid $75 million in penalties and fees and agreed to forfeit an additional $647 million in termination fees to settle federal securities charges related to the sewer debt….  J.P. Morgan is the biggest holder of the county’s sewer debt.”

These articles pop up from time to time, but I believe they are just the tip of the iceberg of deals gone bad that ripped off municipalities and their taxpayers or ratepayers.  Someone should try to set up a database that complies all these deals so the Wall Street tally can be added up.



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