Stockton, CA filed for bankruptcy

[noxiousdog]

And "goosing" it with higher return investments is completely viable and reasonable, given the period they were investing for. Of course not all, or even most of the money should have been in higher risk/return investments, but some, to tweak and increase the overall return a little, sure.

Right. It requires a blend and realistic expectations.

Now if you are doing your planning based on your entire portfolio making that increased return in perpetuity, then we have a problem.

And that is a major part of why there are shortfalls.

[GreenGoo]

Agreed. They also have an enormous advantage over an individual investing, as they can invest for the long haul. The longest haul, since they will be in existence forever (presumably) and have a good chunk of money they can rollover forever, whereas an individual has a potentially mobile but firm deadline, since they can't live forever and need the money for retirement.

Assuming the majority of the pension fund is not needed for immediate payouts, of course.

[Scuzz]

The City of Fresno is looking into bankruptcy if some of it's unions aren't willing to take cuts. They could be next.

[Pyperkub]

I "understand" this. Union pensions usually do the same thing. And that's a problem and one I don't get or have sympathy for. How can look at the last 100 years of industrialized society and urban flight and sit back and 1) make these guarantees, 2) expect these guarantees, and 3) count on these guarantees?.

These are called fixed annuities, and the cost to purchase is known based on actuarial tables, etc. Effectively insurance companies already make these guarantees. Anyone can buy one. These costs are only going because as budgets have gotten tighter, it's been easier to kick the ball down the road and not make the full payments that the annuity insurance calls for.

Think of it like a company not putting all the money that you took out of your paycheck for your 401k into your 401k, and instead spending some of it, and putting the rest of it into credit default swaps and planning on replacing the money in your 401k when you retire.

[Pyperkub]

Well, I did say it was my first instinct, but to me, taking money earmarked for pensions, leveraging it through borrowing in order to speculate, and then losing it and saying - whelp, sucks to be you, needs a little more investigation, especially when using vehicles designed to get around outlawing this behavior (from the LA Times article):

Some municipal finance officers realized in the 1980s that they could use these investment portfolios to do a form of Wall Street speculation that involves borrowing money at one rate with the hope of investing it and earning a higher rate.

Congress made it illegal in 1986 to issue normal tax-exempt municipal bonds for this type of speculation, but municipalities and their outside advisors realized they could get around this by issuing taxable bonds, like corporations. These bonds come with higher interest rates, but many local government officials have believed they could earn enough from investments to come out on top.

This is irresponsible behavior on both parties ends (at best), and whoever is profiting on it, should be examined EXTREMELY closely, and sued/prosecuted for any hint of misconduct.

Fair enough.

Cities suing regarding LIBOR manipulation:

If the banks submitted artificially low Libor rates during the financial crisis in 2008, as Barclays has admitted, it would have led cities and states to receive smaller payments from financial contracts they had entered with their banks, Mr. Shapiro said.

“Unambiguously, state and local government agencies lost money because of the manipulation of Libor,” said Mr. Shapiro, who is managing director of the Swap Financial Group and is not involved in any of the lawsuits. “The number is likely to be very, very big.”

CalPERS is also interested:

Anne Simpson, a portfolio manager at the California Public Employees’ Retirement System — the nation’s largest pension fund — said that the fund’s officials “are sifting through the impact, but there certainly is an impact.”

They go on to make the point that this occurred at the worst possible time:

The city solicitor, George Nilson, said that the rate manipulation claims meant that the city lost out on money when it needed it the most.

“The injury we suffered during the time we suffered it hurt more because we were challenged budgetarily,” Mr. Nilson said. “Every dollar we lost due to illegal conduct was a dollar we couldn’t pay to keep open recreation centers or to pay police officers.”

[noxiousdog]

That will be really interesting to watch. It's really a no lose proposition for the cities. Make noise see if you can extort recover some money.

[GreenGoo]

You don't feel it's a legitimate lawsuit ND?

I don't understand enough to know the impact of these guys fiddling the numbers for their own purposes.

[Little Raven]

That will be really interesting to watch. It's really a no lose proposition for the cities. Make noise see if you can extort recover some money.

I don't see how this is extortion. If the banks really did manipulate the LIBOR, then they deserve every lawsuit that comes their way.

And there will be a lot of them.

[noxiousdog]

You don't feel it's a legitimate lawsuit ND?

I don't understand enough to know the impact of these guys fiddling the numbers for their own purposes.

It might be, it might not. I'm guessing not. Look at the spread in estimates.

"Mr. Shapiro, who helps cities, states and companies negotiate these contracts, said that if a city had interest rate swaps on bonds worth $1 billion and Libor was artificially pushed down by 0.30 percent, which is what the lawsuits contend, that city would have lost $3 million a year. The lawsuit claims the manipulation occurred over three years."

"In Nassau County, the comptroller, George Maragos, said in a statement that according to his own calculations, Libor manipulation may have cost the county $13 million on swaps related to $600 million of outstanding bonds."

And the first one is about 30 times what the evidence showed before averaging with other banks.

LR: see above.

[Little Raven]

Taking issue with the amount asked for is one thing. Figuring out who owes who how much is going to get very complicated very quickly, and that's why we have financial analysts and judges and stuff. I'll leave it to more informed types than me to make that decision.

But your original response seemed to indicate this lawsuit was without merit, and merely an extortion racket. That seems absurd to me. If the banks really did manipulate the LIBOR, they absolutely opened themselves up to litigation.

[noxiousdog]

Taking issue with the amount asked for is one thing. Figuring out who owes who how much is going to get very complicated very quickly, and that's why we have financial analysts and judges and stuff. I'll leave it to more informed types than me to make that decision.

But your original response seemed to indicate this lawsuit was without merit, and merely an extortion racket. That seems absurd to me. If the banks really did manipulate the LIBOR, they absolutely opened themselves up to litigation.

If you say so. Suing someone for over 30 times damages (when they are more likely to settle than go to court due to PR and legal costs) sounds like extortion to me.

[GreenGoo]

Taking issue with the amount asked for is one thing. Figuring out who owes who how much is going to get very complicated very quickly, and that's why we have financial analysts and judges and stuff. I'll leave it to more informed types than me to make that decision.

But your original response seemed to indicate this lawsuit was without merit, and merely an extortion racket. That seems absurd to me. If the banks really did manipulate the LIBOR, they absolutely opened themselves up to litigation.

If you say so. Suing someone for over 30 times damages (when they are more likely to settle than go to court due to PR and legal costs) sounds like extortion to me.

If their legal costs are anywhere near this number they are probably putting too many resources towards legal costs and not enough resources towards ethical business practices. If the PR hit is anywhere near these numbers, they deserve what they get. After all, the negative PR is not some abstract "the universe isn't fair" cost, it's the cost of doing something that makes people not want to do business with you. I.e. you robbed people and now you think it's unfair that there is negative PR?

Look, I don't know what the right answer is here, but legal costs and negative PR is because "you" (the business) did a bad thing. When people sue you and you think settling is the best way to approach it, that doesn't mean you are being extorted. That means the very real costs are more significant than the settled costs, particularly when the settled costs are not related to the initial lawsuit numbers in any way. There's no rule that says settled costs must be x% of the initial lawsuit numbers. My point here is that deciding to settle is because you think there is a very real risk of losing. And, typically, I like to think, this is because the lawsuit has merit and you *should* be on the hook for the full amount.

[noxiousdog]

If their legal costs are anywhere near this number they are probably putting too many resources towards legal costs and not enough resources towards ethical business practices. If the PR hit is anywhere near these numbers, they deserve what they get. After all, the negative PR is not some abstract "the universe isn't fair" cost, it's the cost of doing something that makes people not want to do business with you. I.e. you robbed people and now you think it's unfair that there is negative PR?

Look, I don't know what the right answer is here, but legal costs and negative PR is because "you" (the business) did a bad thing. When people sue you and you think settling is the best way to approach it, that doesn't mean you are being extorted. That means the very real costs are more significant than the settled costs, particularly when the settled costs are not related to the initial lawsuit numbers in any way. There's no rule that says settled costs must be x% of the initial lawsuit numbers. My point here is that deciding to settle is because you think there is a very real risk of losing. And, typically, I like to think, this is because the lawsuit has merit and you *should* be on the hook for the full amount.

The "business" (so far) didn't do a bad thing. A few guys on a desk did a bad thing.

Regardless, it's about risk and reward. The municipalities can risk very little for a huge reward. The banks risk lots of pr for very little saved (6 mill or 13 mill is a rounding error at Barclays).

I encourage criminal prosecution. I'm fine with civil suits.... as long as the damages are within line of reality.

[Pyperkub]

If their legal costs are anywhere near this number they are probably putting too many resources towards legal costs and not enough resources towards ethical business practices. If the PR hit is anywhere near these numbers, they deserve what they get. After all, the negative PR is not some abstract "the universe isn't fair" cost, it's the cost of doing something that makes people not want to do business with you. I.e. you robbed people and now you think it's unfair that there is negative PR?

Look, I don't know what the right answer is here, but legal costs and negative PR is because "you" (the business) did a bad thing. When people sue you and you think settling is the best way to approach it, that doesn't mean you are being extorted. That means the very real costs are more significant than the settled costs, particularly when the settled costs are not related to the initial lawsuit numbers in any way. There's no rule that says settled costs must be x% of the initial lawsuit numbers. My point here is that deciding to settle is because you think there is a very real risk of losing. And, typically, I like to think, this is because the lawsuit has merit and you *should* be on the hook for the full amount.

The "business" (so far) didn't do a bad thing. A few guys on a desk did a bad thing.

Regardless, it's about risk and reward. The municipalities can risk very little for a huge reward. The banks risk lots of pr for very little saved (6 mill or 13 mill is a rounding error at Barclays).

I encourage criminal prosecution. I'm fine with civil suits.... as long as the damages are within line of reality.

What about the jobs of people who were laid off in the cutbacks, or the houses that could have been saved if there were more firefighters?

The damages also have to ensure that this kind of crap doesn't happen again, and that it isn't necessary to go through just to avoid the public being cheated.

The business encouragement to cheat customers, especially the public ones has to stop.

Hello Enron.

Sent from my SPH-D700 using Tapatalk 2

[noxiousdog]

What about the jobs of people who were laid off in the cutbacks, or the houses that could have been saved if there were more firefighters?

The damages also have to ensure that this kind of crap doesn't happen again, and that it isn't necessary to go through just to avoid the public being cheated.

The business encouragement to cheat customers, especially the public ones has to stop.

Hello Enron.

Sent from my SPH-D700 using Tapatalk 2

This is getting ridiculous. Now, you're trying to blame burned down houses on one hundredth of a percent of a *FLOATING* interest rate?

[Pyperkub]

What about the jobs of people who were laid off in the cutbacks, or the houses that could have been saved if there were more firefighters?

The damages also have to ensure that this kind of crap doesn't happen again, and that it isn't necessary to go through just to avoid the public being cheated.

The business encouragement to cheat customers, especially the public ones has to stop.

Hello Enron.

Sent from my SPH-D700 using Tapatalk 2

This is getting ridiculous. Now, you're trying to blame burned down houses on one hundredth of a percent of a *FLOATING* interest rate?

No, I'm tired and cranky

[noxiousdog]

What about the jobs of people who were laid off in the cutbacks, or the houses that could have been saved if there were more firefighters?

The damages also have to ensure that this kind of crap doesn't happen again, and that it isn't necessary to go through just to avoid the public being cheated.

The business encouragement to cheat customers, especially the public ones has to stop.

Hello Enron.

Sent from my SPH-D700 using Tapatalk 2

This is getting ridiculous. Now, you're trying to blame burned down houses on one hundredth of a percent of a *FLOATING* interest rate?

No, I'm tired and cranky

ha ha. i feel your pain. I spent all day cleaning up a mess that I explicitly warned co-workers (and how to prevent it) about two days ago.

[Little Raven]

The "business" (so far) didn't do a bad thing. A few guys on a desk did a bad thing.

Unless the 'business' can demonstrate that the few guys on the desk were completely rogue, this is a distinction without merit. The guys on the desk represented the business. The business is liable for what the guys on the desk did.

I encourage criminal prosecution. I'm fine with civil suits.... as long as the damages are within line of reality.

That's why we have judges. If the cities get too greedy, they'll be shut down.

[Pyperkub]

What about the jobs of people who were laid off in the cutbacks, or the houses that could have been saved if there were more firefighters?

The damages also have to ensure that this kind of crap doesn't happen again, and that it isn't necessary to go through just to avoid the public being cheated.

The business encouragement to cheat customers, especially the public ones has to stop.

Hello Enron.

Sent from my SPH-D700 using Tapatalk 2

This is getting ridiculous. Now, you're trying to blame burned down houses on one hundredth of a percent of a *FLOATING* interest rate?

No, I'm tired and cranky

ha ha. i feel your pain. I spent all day cleaning up a mess that I explicitly warned co-workers (and how to prevent it) about two days ago.

It was day one of the 'clean out the garage' project . I think the thing I'm tying to this is the "24% of bankers think it's necessary to cheat to get ahead." survey a week or so ago.

[noxiousdog]

That's why we have judges. If the cities get too greedy, they'll be shut down.

As far as I know, there's no provision similar to anti-SLAPP that would apply.

[Pyperkub]

The "business" (so far) didn't do a bad thing. A few guys on a desk did a bad thing.

Unless the 'business' can demonstrate that the few guys on the desk were completely rogue, this is a distinction without merit. The guys on the desk represented the business. The business is liable for what the guys on the desk did.

I encourage criminal prosecution. I'm fine with civil suits.... as long as the damages are within line of reality.

That's why we have judges. If the cities get too greedy, they'll be shut down.

The fact of the matter is that Criminal Prosecution rarely happens, when it does, you get this:

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

10 years of work for 3 defendants' who got 5 years each. Most settled. Here's the defense:

The men and women who run these corrupt banks and brokerages genuinely believe that their relentless lying and cheating, and even their anti-competitive cartel­style scheming, are all legitimate market processes that lead to legitimate price discovery. In this lunatic worldview, the bid­rigging scheme was a system that created fair returns for everyone. If a bunch of Pennsylvanians got a 5.00 percent return on their money instead of 5.04 percent, and GE and CDR just happened to split the extra .04 percent, that was a fair outcome, because that's what the parties negotiated. True, the Pennsylvanians had no idea about the extra .04 percent, and true, they had hired CDR precisely to make sure they got that extra 0.4 percent. But hey, it's not like they were complaining: Until someone told them they were being brazenly cheated, they were happy with their bond service.

To sum up:

Get busted for welfare fraud even once in America, and good luck getting so much as a food stamp ever again. Get caught rigging interest rates in 50 states, and the government goes right on handing you billions of dollars in public contracts.

Next time someone blames Wall St., they are correct. It may not be 100%, but the fact of the matter is that they have been illegally ripping off the cities, counties and towns for over a decade, and they need more tax cuts, while their customers are closing schools, fire departments, etc.


Ultimately our legal system won't handle this appropriately. It hasn't held the culprits responsible, especially in this particular case. This case shows that it's not the Cities extorting money...

[noxiousdog]

Out of curiousity, why do you feel entitled to a transparent market?

edit: transparent is the wrong word. A tiny spread market is better.

[Pyperkub]

My google-fu isn't working today. What's a 'tiny spread' market? I didn't run into that during my Econ classes back in the day... (or those brain cells were drowned in beer, one or the other )

[noxiousdog]

My google-fu isn't working today. What's a 'tiny spread' market? I didn't run into that during my Econ classes back in the day... (or those brain cells were drowned in beer, one or the other )

In most transactions, there's a spread. The buyer buys at one price, the seller sells at a different price, and the middleman takes his cut out of the middle.

Why do you feel that should be zero, and assuming that's the case, how should the market maker be compensated?

[noxiousdog]

I remember this case, and my spread argument doesn't really apply.

I'm further curious why the municipality representatives aren't being investigated. I'm also hesitant to blame the banks, as it really looks like the fraud was with CDR. The banks theoretically should refuse to do business, but it's hard to blame anyone for taking advantage of a deal when it's offered. I'd like to see more detail in the kickbacks.

They give an example of

"But if the account was full at the start of the deal, GE may have cheated the county out of as much as $87,600 a year to start.

In any case, GE certainly chiseled the Pennsylvanians out of a sizable sum, because soon after, the company paid CDR a kickback of $57,400 in the form of "fees" on a swap deal.

So, that's a net $30,000 for GE. That's a HUGE risk for a tiny reward. It certainly doesn't sound systemic.

Also, it says, "Utah lost out on 10 basis points, GE bilked the state out of untold sums, and CDR got another nice kickback."

Well, no. The sums are certainly a matter of record. So, I'd be interested in another version of the story.

[Pyperkub]

In my mind, this is like a bribe to not pursue the best price. AFAIK, both the bribe payer and the payee are committing illegal acts. In this case, the phone records definitely indicated collusion to rig the bids on all sides.

[noxiousdog]

This is also a problem of [url=http://www.huffingtonpost.com/rj-eskow/ ... 28520.html]big numbers.[/quote]

if we limit our universe of bank cheating to competitively bid bonds, we're still talking about a market of roughly $1 trillion (in bonds that were issued between 1996 and 2011).

If interest rates were artificially lowered on all of these bonds by ten basis points, as was done in one of the bids in this case, that would have cheated America's towns and cities out of $82 billion dollars in the years between 1996 and 2011.The "nickel" skimmed in another case would have cost our cities $41 billion.

That's a lot of money. Our money.

So, even assuming EVERY "competitively" bid bond was rigged, that's between 3 and 5 billion per year assuming that the average is over .05.

That's not excusing anything, but it does explain why more resources aren't being used to stop it.

The bigger problem is that there isn't a more open exchange for these sorts of things. To do a large bond auction like this you need an investment bank to get people to buy. I'd like to see a more liquid market where we didn't pay exhorbitant sums to investment banks to run them, but I'm not sure that's possible. Even Buffett and Berkshire use investment banks for their issuances and I would highly doubt he'd do it if it could be avoided.

Regardless though, you can't extrapolate a group of people to an entire industry.

[noxiousdog]

In my mind, this is like a bribe to not pursue the best price. AFAIK, both the bribe payer and the payee are committing illegal acts. In this case, the phone records definitely indicated collusion to rig the bids on all sides.

Yes, I'm certainly not disputing there was fraud here. But I'm exploring alternatives to the current market. As long as it's fragmented, there's going to be fraud.

[Pyperkub]

This is also a problem of big numbers.

if we limit our universe of bank cheating to competitively bid bonds, we're still talking about a market of roughly $1 trillion (in bonds that were issued between 1996 and 2011).

If interest rates were artificially lowered on all of these bonds by ten basis points, as was done in one of the bids in this case, that would have cheated America's towns and cities out of $82 billion dollars in the years between 1996 and 2011.The "nickel" skimmed in another case would have cost our cities $41 billion.

That's a lot of money. Our money.

So, even assuming EVERY "competitively" bid bond was rigged, that's between 3 and 5 billion per year assuming that the average is over .05.

That's not excusing anything, but it does explain why more resources aren't being used to stop it.

The bigger problem is that there isn't a more open exchange for these sorts of things. To do a large bond auction like this you need an investment bank to get people to buy. I'd like to see a more liquid market where we didn't pay exhorbitant sums to investment banks to run them, but I'm not sure that's possible. Even Buffett and Berkshire use investment banks for their issuances and I would highly doubt he'd do it if it could be avoided.

Regardless though, you can't extrapolate a group of people to an entire industry.

Actually, I don't have to extrapolate whatsoever since the other players in the industry settled for on the order of $700m. In other words, they paid the fine and moved on.

[noxiousdog]

Actually, I don't have to extrapolate whatsoever since the other players in the industry settled for on the order of $700m. In other words, they paid the fine and moved on.

Or, they felt it was wasn't worth their time in court to oppose it.

[Pyperkub]

Actually, I don't have to extrapolate whatsoever since the other players in the industry settled for on the order of $700m. In other words, they paid the fine and moved on.

Or, they felt it was wasn't worth their time in court to oppose it.

Nope. Per the article:

Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government's case. (Bank of America even entered the Justice Department's leniency program, which is tantamount to admitting that it committed felonies.) Since that settlement involves only four of the firms implicated in the scam (a list that includes Goldman, Transamerica and AIG, as well as banks in Scotland, France, Germany and the Netherlands), and since settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it's safe to assume that Wall Street skimmed untold billions in the bid-rigging scam. The UBS settlement alone, for instance, involved 100 different bond deals, worth a total of $16 billion, over four years.

[noxiousdog]

Actually, I don't have to extrapolate whatsoever since the other players in the industry settled for on the order of $700m. In other words, they paid the fine and moved on.

Or, they felt it was wasn't worth their time in court to oppose it.

Nope. Per the article:

Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government's case. (Bank of America even entered the Justice Department's leniency program, which is tantamount to admitting that it committed felonies.) Since that settlement involves only four of the firms implicated in the scam (a list that includes Goldman, Transamerica and AIG, as well as banks in Scotland, France, Germany and the Netherlands), and since settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it's safe to assume that Wall Street skimmed untold billions in the bid-rigging scam. The UBS settlement alone, for instance, involved 100 different bond deals, worth a total of $16 billion, over four years.

Look, I'm glad Taibbi did the work, but his numbers and wordings are exaggerations. Jefferson County, Alabama wasn't "saddled" with 3 billion in sewer debt. They took on 3 billion in debt. The debt the was then waiting to be paid out, received a lower interest rate than they otherwise would have received.

I've worked IT for trading organizations for 17 years now. If the feds come in, you do EVERYTHING in your power to cooperate, including entering the Justice Department's leniency program, if it will protect your trading organization. Does that mean you're getting off? Hell no. It means you're going to have a fed watchdog in your office and in your executive meetings for as long as the terms dictate. But, you don't have your records released to competitors, and you don't risk losing your trading license on further exploration of the incident. And if you can pay a fine (even 673 million across those 4 banks), you're going to do it.

The alternative is to believe it's a big conspiracy and every justice department in the world is in on it.

[Pyperkub]

Actually, I don't have to extrapolate whatsoever since the other players in the industry settled for on the order of $700m. In other words, they paid the fine and moved on.

Or, they felt it was wasn't worth their time in court to oppose it.

Nope. Per the article:

Four banks that took part in the scam (UBS, Bank of America, Chase and Wells Fargo) paid $673 million in restitution after agreeing to cooperate in the government's case. (Bank of America even entered the Justice Department's leniency program, which is tantamount to admitting that it committed felonies.) Since that settlement involves only four of the firms implicated in the scam (a list that includes Goldman, Transamerica and AIG, as well as banks in Scotland, France, Germany and the Netherlands), and since settlements in Wall Street cases tend to represent only a tiny fraction of the actual damages (Chase paid just $75 million for its role in the bribe-and-payola scandal that saddled Jefferson County, Alabama, with more than $3 billion in sewer debt), it's safe to assume that Wall Street skimmed untold billions in the bid-rigging scam. The UBS settlement alone, for instance, involved 100 different bond deals, worth a total of $16 billion, over four years.

Look, I'm glad Taibbi did the work, but his numbers and wordings are exaggerations. Jefferson County, Alabama wasn't "saddled" with 3 billion in sewer debt. They took on 3 billion in debt. The debt the was then waiting to be paid out, received a lower interest rate than they otherwise would have received.

I've worked IT for trading organizations for 17 years now. If the feds come in, you do EVERYTHING in your power to cooperate, including entering the Justice Department's leniency program, if it will protect your trading organization. Does that mean you're getting off? Hell no. It means you're going to have a fed watchdog in your office and in your executive meetings for as long as the terms dictate. But, you don't have your records released to competitors, and you don't risk losing your trading license on further exploration of the incident. And if you can pay a fine (even 673 million across those 4 banks), you're going to do it.

The alternative is to believe it's a big conspiracy and every justice department in the world is in on it.

re: Jefferson County, you are mis-stating the case somewhat, not only did the Jefferson County debt get screwed on the 'lower interest rate' that they would receive, but they also were hit on the other side by the fraudulent Credit-Default-Swap hedge investments they were sold.

[noxiousdog]

re: Jefferson County, you are mis-stating the case somewhat, not only did the Jefferson County debt get screwed on the 'lower interest rate' that they would receive, but they also were hit on the other side by the fraudulent Credit-Default-Swap hedge investments they were sold.

Regardless, they didn't get "saddled" with debt.

[Pyperkub]

re: Jefferson County, you are mis-stating the case somewhat, not only did the Jefferson County debt get screwed on the 'lower interest rate' that they would receive, but they also were hit on the other side by the fraudulent Credit-Default-Swap hedge investments they were sold.

Regardless, they didn't get "saddled" with debt.

Depends. If the interest rate differential is high (this articleuses an example of 8.7%/year, that could be a LOT more debt, especially on 3 billion in bonds).

[noxiousdog]

re: Jefferson County, you are mis-stating the case somewhat, not only did the Jefferson County debt get screwed on the 'lower interest rate' that they would receive, but they also were hit on the other side by the fraudulent Credit-Default-Swap hedge investments they were sold.

Regardless, they didn't get "saddled" with debt.

Depends. If the interest rate differential is high (this articleuses an example of 8.7%/year, that could be a LOT more debt, especially on 3 billion in bonds).

Yes, but had they not defaulted, which has little if anything to do with the banks, they could refinance.

Chances are, even though they did declare bankruptcy, they'll be able refinance albeit at above market rates.

Well, that does depend on the bond I suppose, but can hedge against a floating rate, just like they hedged into it.

[Pyperkub]

Yeah, I think the main reason they declared bankruptcy wasn't solely this, but rather that their main tax vehicle for the entire county was declared illegal in addition to this, so that the associated bond payments were as much or more than the entire County revenue.

[noxiousdog]

Re: Jefferson County

It sounds like there was fraud all around.

from wiki:
" several former county officials convicted of bribery and corruption."

Seems to me, both the payor and the payee should wind up in prison. I still don't think that you can hold an entire company responsible for the actions of a few, any more than you can hold all legislators responsible for the actions of a few.

[Tareeq]

Seems to me, both the payor and the payee should wind up in prison. I still don't think that you can hold an entire company responsible for the actions of a few, any more than you can hold all legislators responsible for the actions of a few.

Your assignment is to study Latin: You may begin with the phrase respondeat superior.

[noxiousdog]

Seems to me, both the payor and the payee should wind up in prison. I still don't think that you can hold an entire company responsible for the actions of a few, any more than you can hold all legislators responsible for the actions of a few.

Your assignment is to study Latin: You may begin with the phrase respondeat superior.

That is of course true and makes sense. But that doesn't impune the character of everyone else that works there or the industry. I highly doubt you'd like to be judged by the dubious character lawyers.