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More Looting of Taxpayers: Wall Street Collects $4 Billion as Swaps Backfire

with 6 comments

Bloomberg.com Nov 9, 2010

The subprime mortgage crisis isn’t the only calamity Wall Street created that’s upending the finances of U.S. states and cities.


Wall Street banks and insurers peddled financial derivatives known as interest-rate swaps to governments and nonprofits that bet they could lower the cost of borrowing. There were as much as $500 billion of the deals done in the $2.8 trillion municipal bond market before the credit crisis, according to a report by Randall Dodd, a senior researcher on the Financial Crisis Inquiry Commission, published by the International Monetary Fund in June.

Borrowers from New York to California are now paying to get out of agreements. Altogether, they have made more than $4 billion of termination payments to firms including New York- based Citigroup Inc., New York-based JPMorgan Chase & Co. and Charlotte, North Carolina-based Bank of America Corp. since the beginning of 2008, according to a review of hundreds of bond documents and credit-rating reports by Bloomberg News.

In contrast to the subprime crisis, few taxpayers know anything about the cost of untangling municipal swaps. The only disclosure of payments to Wall Street often is buried in documents borrowers have to give investors when they sell bonds.

In many cases, firms getting payments aren’t explicitly identified and government officials often don’t call attention to payments made to cancel contracts. Many of the telephone calls and e-mails from Bloomberg News to dozens of government and nonprofit officials over the last eight months seeking comment on derivative transactions went unanswered…….

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6 Responses

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  1. Why is there no anger? After, massive job losses, foreclosures on homes & higher taxes isn’t there more anger by the People. I think the founding fathers would be ashame of us if they knew how easily we give up our country to corruption.


    November 12, 2010 at 7:14 am

    • People are in shock, are medicated to the gills, dosed with sugar-fat-salt, and distracted by massive perception management (it’s become an art form.)

      The anger has been turned inward….The Zombie-fication of the Nation is well underway. We have to wake each other up!


      November 12, 2010 at 8:54 am

  2. Endless finabcial fraud, yet another violation of our rights. Add it to the list of gov’t violations of our right:
    They violate the 1st Amendment by placing protesters in cages, banning books like “America Deceived II” and censoring the internet.
    They violate the 2nd Amendment by confiscating guns.
    They violate the 4th and 5th Amendment by molesting airline passengers.
    They violate the entire Constitution by starting undeclared wars for foreign countries.
    Impeach Obama and sweep out the Congress, except Ron Paul.
    (Last link of Banned Book):

    Dale T

    November 12, 2010 at 7:46 am

  3. […] (LaudyMS) – More Looting of Taxpayers: Wall Street Collects $4 Billion as Swaps Backfire – Read More Here […]

  4. […] (LaudyMS) – More Looting of Taxpayers: Wall Street Collects $4 Billion as Swaps Backfire – Read More Here […]


    The wolves sure know how to oHOWLma
    At the news which can make me oGROWLma;
    I’ll never throw in the oTOWELma
    If we can get rid of oBOWELma !

    [Google “Madam Nancy Pelosi’s Brothel District,” “Michelle Obama’s Allah-day” and “Obama Fulfilling the Bible.”]


    November 17, 2010 at 7:44 pm

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