Looting Main Street: How the nation's biggest banks are ripping off American cities

[happy_liberal]

f you want to know what life in the Third World is like, just ask Lisa Pack, an administrative assistant who works in the roads and transportation department in Jefferson County, Alabama. Pack got rudely introduced to life in post-crisis America last August, when word came down that she and 1,000 of her fellow public employees would have to take a little unpaid vacation for a while. The county, it turned out, was more than $5 billion in debt — meaning that courthouses, jails and sheriff's precincts had to be closed so that Wall Street banks could be paid.

As public services in and around Birmingham were stripped to the bone, Pack struggled to support her family on a weekly unemployment check of $260. Nearly a fourth of that went to pay for her health insurance, which the county no longer covered. She also fielded calls from laid-off co-workers who had it even tougher. "I'd be on the phone sometimes until two in the morning," she says. "I had to talk more than one person out of suicide. For some of the men supporting families, it was so hard — foreclosure, bankruptcy. I'd go to bed at night, and I'd be in tears."

Homes stood empty, businesses were boarded up, and parts of already-blighted Birmingham began to take on the feel of a ghost town. There were also a few bills that were unique to the area — like the $64 sewer bill that Pack and her family paid each month. "Yeah, it went up about 400 percent just over the past few years," she says.

The sewer bill, in fact, is what cost Pack and her co-workers their jobs. In 1996, the average monthly sewer bill for a family of four in Birmingham was only $14.71 — but that was before the county decided to build an elaborate new sewer system with the help of out-of-state financial wizards with names like Bear Stearns, Lehman Brothers, Goldman Sachs and JP Morgan Chase. The result was a monstrous pile of borrowed money that the county used to build, in essence, the world's grandest toilet — "the Taj Mahal of sewer-treatment plants" is how one county worker put it. What happened here in Jefferson County would turn out to be the perfect metaphor for the peculiar alchemy of modern oligarchical capitalism: A mob of corrupt local officials and morally absent financiers got together to build a giant device that converted human shit into billions of dollars of profit for Wall Street — and misery for people like Lisa Pack.

And once the giant shit machine was built and the note on all that fancy construction started to come due, Wall Street came back to the local politicians and doubled down on the scam. They showed up in droves to help the poor, broke citizens of Jefferson County cut their toilet finance charges using a blizzard of incomprehensible swaps and refinance schemes — schemes that only served to postpone the repayment date a year or two while sinking the county deeper into debt. In the end, every time Jefferson County so much as breathed near one of the banks, it got charged millions in fees. There was so much money to be made bilking these dizzy Southerners that banks like JP Morgan spent millions paying middlemen who bribed — yes, that's right, bribed, criminally bribed — the county commissioners and their buddies just to keep their business. Hell, the money was so good, JP Morgan at one point even paid Goldman Sachs $3 million just to back the fuck off, so they could have the rubes of Jefferson County to fleece all for themselves.

http://www.rollingstone.com/politics/story/32906678/looting_main_street/print

[dixiegrrrrl]

1. Not only Jefferson County, in my state, but whole countries

are getting essentially the same treatment, in various forms.

[msongs]

2. thank god we still have 100's of billions for Obama's wars nt

[L0oniX]

8. +1

[truedelphi]

23. And ain't it grand that Mr Obama is so concillatory that he lets

Rat Bastard Geithner occupy an office just down the hall from the Oval Office.

This is going to be this President's undoing - unless of course,t he Powers that Be keep amping the ante on the Tea Bagger movement. Such that we have to vote for Palin or Obama.

Which I suspect has been the plan all along.

[applegrove]

3. It became the business model, in 1990, for corporations to see their customers as a type of

competator to be "used" instead of seeing them as a customer who should be valued.

[earth mom]

4. K & R! nt

[HCE SuiGeneris]

5. An important piece.

Just another shiv to the taxpayer, courtesy of unchecked capitalistic greed.

[JDPriestly]

6. This article makes me wonder how much of California's financial

problems are due to the fact that our state financed so many "improvements" through bonds. I'm thinking about bills to finance the construction of schools, many, many things. Wonder what kinds of interest we are paying.

[Vinca]

7. The flim flam continues.

It's really outrageous to think that nothing has been done - zero - to regulate these criminals. I swear Matt Taibbi knows more about "banking" (if that's what you want to call it) than anyone in Washington or at the Fed.

[Trillo]

9. Time for a reboot? nt

[erpowers]

10. $260 a Week

Republican are claiming that people are refusing to work because they are paid unemployment insurance. I do not think there is any person who would purposely stay out of work when they are making such a small amount of money.

In terms of the banks and the sewers, if what is said in the article is true criminal charges should be leveled against these companies. In addition, they should be forced to forgive most if not all the debt that was created by the deal. If it can be proven that bribery did take place either all of the debt that accumulated after the bribery should be erased or the debt should be negotiated to a lower level.

[Greyhound]

12. That's the problem with Kleptocracy, they buy the laws they want so it is not illegal.

I hope (as usual) that I'm wrong, but I'd be quite surprised if anything can be done about this or any of the thousands of similar scams run on the sheeple.

[RB TexLa]

11. The local governments have no responsibility for agreements they entered?

[Greyhound]

13. When a confidence scam is run, it is not the victim's fault.

The "personal responsibility" meme is so prevalent in certain circles and serves only to elevate assholery beyond acceptable to admirable status.

[RB TexLa]

14. Very few people consider personal responsibility to be a meme.

[Greyhound]

16. There is a big difference between personal responsibility and the

personal responsibility meme, which translates as "tough shit sucker". That so many seem incapable of even the most rudimentary reasoning, preferring to lump everything into some narrow, simplistic catch-phrase, is a major contributing factor to this national clusterfuck.

[RB TexLa]

17. Did the local governments sign contracts? They, as anyone, are responsible for their end of a

contract. It is that simple.

[Greyhound]

20. Simple, yes that's the word.

Game, set, and match.

[RB TexLa]

25. So you do understand that personal responsibility is a simple concept. You understand but don't

accept it.

[Greyhound]

26. You apparently are unable to understand the difference between an obvious

concept and a prejudicial distraction.

Blaming the victims defines your position.

[laughingliberal]

29. Oh, come now. We mustn't let the proles escape responsibility by talking about the abuse of our

system by the wealthy and powerful.

[brentspeak]

32. And do you understand the concept of "fraud"?

It's a simple concept.

http://www.sec.gov/news/press/2009/2009-232.htm

J.P. Morgan Settles SEC Charges in Jefferson County, Ala. Illegal Payments Scheme

Washington, D.C., Nov. 4, 2009 — The Securities and Exchange Commission today charged J.P. Morgan Securities Inc. and two of its former managing directors for their roles in an unlawful payment scheme that enabled them to win business involving municipal bond offerings and swap agreement transactions with Jefferson County, Ala. This is the SEC's second enforcement action arising from Jefferson County's bond offerings and swap transactions.

J.P. Morgan Securities settled the SEC's charges and will pay a penalty of $25 million, make a payment of $50 million to Jefferson County, and forfeit more than $647 million in claimed termination fees.

The SEC alleges that J.P. Morgan Securities and former managing directors Charles LeCroy and Douglas MacFaddin made more than $8 million in undisclosed payments to close friends of certain Jefferson County commissioners. The friends owned or worked at local broker-dealer firms that performed no known services on the transactions. In connection with the payments, the county commissioners voted to select J.P. Morgan Securities as managing underwriter of the bond offerings and its affiliated bank as swap provider for the transactions.

J.P. Morgan Securities did not disclose any of the payments or conflicts of interest in the swap confirmation agreements or bond offering documents, yet passed on the cost of the unlawful payments by charging the county higher interest rates on the swap transactions...

[laughingliberal]

28. It's a 'meme' when it lets the scammers off the hook and blames the scammed

Why the F are the working people of this country held to a higher 'moral' standard than those who bought our government and got the laws passed to make the once illegal, legal? I spent my whole life being personally responsible only to have everything go down the drain with the latest ripoff of the country. Sorry, I'm done worrying about it until I see a some personal responsibility at the top.

[bertman]

34. Why? Because of the "Golden Rule". They who have the GOLD make the RULES.

Same as it ever was.

[amborin]

15. recommend

[malaise]

18. Bushco made that possible and when Spitzer wrote that

February 14th Op Ed exposing what was going down, guess who was taken down.

http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html
<snip>
Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation of possible discrimination in mortgage lending by a number of banks, the OCC filed a federal lawsuit to stop the investigation.

[laughingliberal]

33. Nice. Course I'm sure that's all been fixed now, right?

:sarcasm:

[Greyhound]

19. Remember the Evergreen/Enron extortion of California?

Beige Davis lost his political career because he wouldn't call their bluff, the perpetrators got away with over $10B taxpayer dollars, and the 5th largest economy (at that time) on earth was sent into a free-fall it never recovered from, and who went to jail for it?

BTW, who was in charge of the Federal government while this crime was being committed?

[laughingliberal]

30. Mustn't forget that CA's $9 billion lawsuit against Enron magically disappeared when

the governator took over, either.

Yeah, I'll think about living my former life of personal responsibility when I see a few bankers and Wall Street execs doing the perp walk.

[Cessna Invesco Palin]

21. "Caveat emptor" is Latin for "get a brain morans."

I read the article, and it's pretty obvious that a lot of foolish local government officials caused the problem, not the banks.

[truedelphi]

22. Looting Main Street: How the nation's biggest banks are ripping off American cities

And I'll add a few words to it:

While this Administration pretends that it isn't happening.

[Liberal_in_LA]

24. OMG!

[bvar22]

27. Now, now...There you go again...

"begrudging them their wealth".
"Look at all the Baseball Players!"
"Its the Free Market."
"A Uniquely American Solution!"

"All Hail the Giant Invisible Hand of the Free Market!"
"The Giant Invisible Hand will SAVE us ALL!"
"The Giant Invisible Hand Demands that we sacrifice the American Working Class on the altar of Free Trade!"
"All Hail The Giant Invisible Hand."
.
.
.
.
And people say the Democrats are Anti-Religion.

[laughingliberal]

31. +1000 nt

[Richard Steele]

35. K&R

[WinkyDink]

36. Paying a fourth of $260 for health insurance? (I know, not the main point; but I pay over $500/mo!)