Love him or hate him, Rolling Stone's Matt Taibbi always offers an interesting read. [Dec 11, 2009: Obama's Big Sellout][ In this latest article, the man who brought us Goldman Sachs as America's vampire squid wrapped around the face of humanity (which surely is taken as a badge of honor inside 85 Broad) ,offers a look at how our
financial oligarchs investment banks are creating predatory loans sounds transactions at America's municipal level that benefit themselves at the expense of the taxpayer everyone. Of course this is where the investment bank lobbyists and publicists come to the rescue saying we are only providing what the cities ask of us and Joe in accounting in Muncie, Indiana is a sophisticated investor - cleary this is a 2 sided transaction between 2 equals... Joe and his merry band of accounting clerks and city managers, and our team of Harvard MBAs whose only purpose in life is to walk in the door each day & spend 10-12 hours a day thinking how to extract every ounce of monies from our unsuspecting customers errr.... clients. Clearly a balanced transaction between 2 sophisticated parties... what could ever go wrong? [Feb 25, 2010: Banks Bet Greece Defaults on Debt they Helped Hide]
p.s. While Taibbi's Goldman piece (some assumptions are a bit over the top) thrust him in the public spotlight his story in March 2009 entitled The Big Takeover is the one people should have been reading.
It's a 6 page article - some snippets via Rolling Stone
- If you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.
- As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. I'd be on the phone sometimes until two in the morning, she says. I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears.
- The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase.
- Yeah, it (sewer bills) went up about 400 percent just over the past few years, she says.
- The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — the Taj Mahal of sewer-treatment plants is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human sh** into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack
- And once the giant sh** machine was built and the note on all that fancy construction started to come due, Wall Street came back to the local politicians and doubled down on the scam. They showed up in droves to help the poor, broke citizens of Jefferson County cut their toilet finance charges using a blizzard of incomprehensible swaps and refinance schemes — schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt.
- In the end, every time Jefferson County so much as breathed near one of the banks, it got charged millions in fees. There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that's right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business.
- Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the f*** off, so they could have the rubes of Jefferson County to fleece all for themselves.