Wall Street: $474 Million, Detroit: 0
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
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.
Municipal borrowers from the Metropolitan Water District of Southern California to Harvard University in Cambridge, Massachusetts, have paid billions to banks to end interest-rate swaps that didn’t protect them.
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.
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