Apr 12, 2010 & & & Economy headlines around email. & & Start a Petition » change_setup("300", "Featured", "all", "#DCB000", 6); Wall Street has been posting jot down profits, and big banks are doling out billions of dollars in bonuses. How is this possible?& A new essay in Rolling Stone repository by publisher Matt Taibbi takes an in-depth see at the experience of one small Alabama town. The essay says promissory note hulk JPMorgan bribed city officials in Jefferson County to get disdainful rights to assistance monetary the building a total of a new cesspool complement for that city.AMY GOODMAN: Matt Taibbi writes, quote, On a cesspool plan that was creatively ostensible to cost $250 million, the county right away due a sum of $1.28 billion only in seductiveness and fees on the debt.He goes on to write, The drop of Jefferson County reveals the simple conflict plan of these complicated barbarians, the approach that banks similar to JP Morgan and Goldman Sachs have evenly set out to ravaging towns and cities from Pittsburgh to Athens.Matt Taibbi joins us here in the firehouse studio. His essay is called Looting Main Street.Welcome to Democracy Now! Lay it out for us. What did the banks do?MATT TAIBBI: Well, basically, the a unequivocally prolonged story, but what happened was theBirmingham, the city of Birmingham in Jefferson County, they were sued by the EPA behind in the early 90s. They had a inadequate cesspool system. They were forced to set up a new cesspool system, and so they borrowed a ton of income to set up this new cesspool system. All the internal politicians used about $3 billion of this money. They funneled it to all their buddies who were contractors. And then, when the rent came due on all of this, when they had to begin profitable for this, they didnt wish to do it, since raising rates would have been politically unpopular. So they went to Wall Street, and they fundamentally refinanced their debt. And thats what this is all about.And these deals for refinancing the debt were so remunerative that the banks fundamentally fought over who would get these contracts. And the process for removing the contracts was to flue millions of dollars to buddies of the county commissioners, who would then, in turn, follow the county government official around with assign cards and paid for their Ferragamo suits and Rolex watches. And thats how Jefferson County finished up removing in to a incident where they had $5 billion in debt on a $250 million cesspool project.JUAN GONZALEZ: And the tangible plan was about $3 billion to build, or was itMATT TAIBBI: Yeah, the primary guess for this plan was $250 million. They finished up spending about $3 billion on this. And they finished up owing about $5 billion in the end, after you see at all the refinancing and the seductiveness rate swaps and everything.JUAN GONZALEZ: And you go by the assorted schemes that the banks came up with. Credit default swaps, was it? OrMATT TAIBBI: Yeah, seductiveness rate swaps.JUAN GONZALEZ: Interest rate swaps.MATT TAIBBI: Right. These are additionally derivatives. Again, theres this total universe of monetary instruments that are fundamentally unregulated, interjection to a law that was upheld in 2000 called the Commodity Futures Modernization Actcredit default swaps, collateralized debt obligations, seductiveness rate swaps. These are all derivatives. Theyre all all unregulated. So theres no SEC or CFTC thats unequivocally seeking at these things. And so, as a outcome of this, a lot of these deals fly underneath the radio detector completely, and theres no approach to unequivocally make or forestall rascal in any of this stuff.1234; &
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