Willie Osterweil • shareable.net • October 30, 2012
Since the financial collapse began in 2008,Wall Street bankers’ claims to being the smartest guys in the room—hard-working innovators with billion dollar ideas and the will to execute them—have been proven all too right. When it comes to stealing the accumulated wealth of the American people, no group in living memory has proven to be so ceaselessly creative, so ruthlessly efficient at turning public wealth into private cash.
It’s not just the bailouts, though they are the most obvious example. The federal government, with its revolving-door that always opens on Wall Street, has failed to prosecute any but the most brazen and stupid crimes, giving implicit criminal immunity to the banks, while regularly passing wheelbarrows of friendly legislation (not to mention national tax-receipts) their way.
But at least in D.C it’s team work. When it comes to state, county and municipal governments, school boards and transit authorities, Wall Street prefers the straight con, emptying local coffers through purposely complex debt instruments and shoddy financial products. Not a few pensions went bust buying CDOs , the infamous securities created by slicing and dicing a pool of worthless mortgages to make them appear AAA safe.
But the financial innovators devised an even more direct technique for emptying the pockets of local governments. Selling “structured finance” products and “interest-rate swap” bonds, they’ve turned the nation’s vital infrastructure into a cash cow. In a fiery speech to Philadelphia City Council on October 23, Mike Krauss, director of the Public Banking Institute, denounced these Wall Street practices and offered a local solution that municipalities could take up to free themselves from these forms of fraud.
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