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Wall Street nails taxpayers again

Sunday, November 22nd, 2009   8:45 am | Author: Jerry | Economy, Money, Politics/Government |
Tags: , ,

An article in this week’s BusinessWeek titled “Wall Street Plays Hardball” makes it clear that the taxpayers are taking a hit, again.

 

“Wall Street targeted cities big and small with risky financial products that promised to save them money or boost returns. Investment bankers sold exotic derivatives designed to help municipalities cut borrowing costs. Banks and insurance companies constructed complicated tax deals that allowed public utilities, transit authorities, and other nonprofit organizations to extract cash immediately from their long-term assets. Private equity firms, pointing to stellar historical gains, persuaded big public pension funds to plow billions of dollars into high-cost investments at the peak of the market. Many of the transactions shared a striking similarity: provisions that protected the banks from big losses and left the customers on the hook for huge payouts.”

 

“Now, as many of those deals sour, Wall Street is ramping up its efforts to collect from Main Street. “The banks stuffed customers with [questionable investments] and then extorted money from the customers to get rid of them,” says Christopher Whalen, managing director at research firm Institutional Risk Analytics.”

 

The no strings attached loans to save the financial institutions are now coming back to haunt almost every taxpayer.

 

While executives at Goldman Sachs, UBS at others are getting rich and fat, taxpayers are left holding the bag.

 

Essential services provided by municipalities are being cut to pay the fees on the investments that tanked in the last year.

 

“Detroit’s public schools, which had been putting off paying textbook suppliers and other vendors, aren’t likely to see their funding rise now that banks are taking a bite out of the city’s budget. The Royal Oak school district is eliminating after-school music programs and asking parents to pay $100 per child to play sports.”

 

The government should step in and and if nothing else work out a moratorium to delay payments until the economy and jobs recover.

 

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