One has to wonder, when you start hearing of things like this....
In a $2.8 trillion municipal bond market that more than doubled in just over a decade, public corruption, officials mistakes and lack of disclosure cost taxpayers as much as $6 billion a year, according to data compiled by Bloomberg.
What's going on here?
Nov. 2 (Bloomberg) -- At the end of a March 6, 2000, conference call with the financial adviser David Rubin, city of Atlanta officials disqualified the winning bid for a $453.3 million investment-management contract.
The decision shaved $58,000 off what Atlanta taxpayers would have earned from the $13.5 million high bid and awarded the account to runner-up Bank of America Corp., according to a copy of city documents obtained under the Georgia Records Act.
Only after the Internal Revenue Service investigated five years later did local officials learn that Rubins firm, CDR Financial Products Inc., had entered into a secret side agreement with the Charlotte, North Carolina-based bank. CDRs share would be worth as much as $340,000, based on city and federal records.
This, ultimately, is the sort of result that one can expect when we refuse to stop the looting and start prosecuting.
There have been many over the last two years who said that the "subprime (and stated income) borrowers deserved it" - referring to the loss of their houses, of course.
Perhaps they did.
But the bigger issue here - the societal issue - is how crooked the entire marketplace has become for securities in general. Not just for end-user mortgages but also for securitizations, municipal bonds (as outlined in this article) - virtually everything!
We need a worldview change about transparency and that includes municipal finance, said Elizabeth Warren, chairwoman of the Congressional Oversight Panel for the Troubled Asset Relief Program, in an interview with Bloomberg last month.
Indeed. But so far we see zero indication that we're going to get it. Municipal finance is just one tiny piece of the scam-ridden world of financial back-room deals.
Witness the mortgage-backed bond business, where firms such as Goldman Sachs have admitted shorting the very mortgage-backed securities they were packaging and selling! McClatchy ran a story this weekend on the matter which I opined on this morning; the salient factor here being not that McClatchy picked this up, but that it took two years for the so-called "mainstream DC media" to do so!
We continue to see the fraud-and-pony-show throughout Wall Street and Washington DC - and there is no indication anywhere that anyone gives a damn. Amnesty, as given to Bank of America in this case, is an outrage. Remember that the allegation in the instant case is that:
IRS believes that CDR, Bank of America and possibly others may have colluded to fix pricing, an unidentified Atlanta employee wrote in an undated internal memorandum after city authorities met with IRS investigators in September 2005.
Got it? Fix prices, and if you're a big bank you get amnesty. Even though what you did is under black-letter law felonious, you will not be prosecuted so long as you are one of the favored few.
How much more of this is hidden under the rock of bribes, er, "campaign contributions" and lobbying? The answer is likely to surprise, but what's also likely to surprise is exactly how little of this we the "little people" will ever hear about.
Sustainable economic growth does not come from scams - it comes from honest deals. So long as the way Wall Street "makes money" is to rip someone off, and those who engage in such activity are given "amnesty" instead of losing their corporate charters we will simply continue robbing the common man for the benefit of the few banksters among the "privileged elite."