How Wall Street Used Swaps to Get Rich at the Expense of Cities

How Wall Street Used Swaps to Get Rich at the Expense of Cities

Posted: 25 Mar 2015 06:55 AM PDT

This post by Ed Walker provides a detailed description of how badly municipalities have been fleeced when they bought interest rate swaps from Wall Street as part of financings. It isn't simply that these borrowers were exploited, but that the degree of pilfering was so extreme that the financiers clearly knew they were dealing with rubes and took full advantage of the opportunity. But what is even more troubling than the fact set here is the failure of the overwhelming majority of abused borrowers to seek to recover their losses. Walker describes that multiple legal approaches lead you to the same general conclusion: the swaps provider, as opposed to the hapless city, should bear the brunt of the losses. So why haven't cities like Chicago, that have been hit hard by swaps losses, fought back? Walker does not speculate, but in the case of Rahm Emanuel, it's not hard to imagine that his deep ties to Big Finance are the reason.http://www.nakedcapitalism.com/2015/03/getting-rich-expense-cities.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29