Skip to comments.Looting Main Street. How America's Biggest Banks Looted America's Cities With Deals like Greece's
Posted on 03/06/2011 9:08:21 AM PST by SeekAndFindEdited on 03/06/2011 11:44:56 AM PST by Admin Moderator. [history]
If 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.
Wall Street's Bailout Hustle
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."
This article appeared in the April 15, 2010 issue of Rolling Stone. The issue is available in the online archive.
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.
Wall Street's Naked Swindle
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.
Invasion of the Home Snatchers
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.
I posted only the relevant portions of the article. Click on the above link for the rest.
Warning -- obscenities in the article. Reader discretion advised.
The whole thing was an obscenity. The people who authorized it (on both sides) should be suffering right along with the sheeple.
It is hard to fathom why we need to read the Rolling Stone to get these stories.
“The people who authorized it (on both sides) should be suffering..”
Totally agree. BOTH sides need to be hung out to dry. The TBTF banks and the politicians.
Honest journalism appears to have been lost long ago, if it ever existed.
How can they be honest when they depend on their advertisers? They never really were independent, and remain so, unfortunately to this very day.
“Warning — obscenities in the article. Reader discretion advised.”
Yeah, Taibbi has to relay the information in ‘Left-Speak’. If there’s not enough flowery expletives, the target demo will start thinking the article belongs in the Weekly Standard.
How much of this could have been avoided by having the contracts made public long before they were signed ?
Unfortunately, the Kelo vs. New London decision by the Supreme Court also makes it much easier for corrupt local politicians and officials to rip off their constituents. All they have to do is decide it is in the city’s or county’s “best interest” to take private property from one individual, business or entity and sell it to another.
Wall Street lending on municipal bonds. Shocking.
Taibi, the communist, thinks money grows on trees.
And none of this is the fault of the Democrat and RINO politicians who piled up huge debts, issued more and more bonds, borrowed more and more money, and then found that they were, well, in debt?
I blame the politicians first, for insane borrowing, and the banksters second, for agreeing to lend to them.
Hell of a read. Hard to believe we can recover from this without some serious strife. Third world style government needs tp be rooted out.
RE: The people who authorized it (on both sides) should be suffering right along with the sheeple.
As one reads the story and how a project budgeted for just $250 Million balooned to 5 times its original etimated cost, one cannot help but appreciated the foresight of Chris Christie when he vetoed the potential boondoogle that is the NJ to NYC train tunnel that was originally estimated at $6 Billion and now is estimated to cost $14 B ( and will that be the end of it?).
You can take this to the bank — when government estimates the cost of a new program to be X dollars, mulitply that by 4 at a mimimum.
The "Wall Street bankers" weren't the problem here . . . the incompetent, corrupt public officials who signed these deals were.
And look who the impetus was: that’s right, the EPA.
For anyone who looks around at his county, city, or state, and asks “How did it get like this?”, this article explains a lot.
AND THE REAL LOOTING OF ALL AMERICANS HAS BEEN GOING ON FOR ALMOST 100 YEARS THANKS TO OUR GREEDY, CORRUPT, SELFISH AND INCOMPETENT FEDERAL GOVERNMENT, MAINLY OUR CONGRESS.
“The Wall St bankers weren’t the problem here”
Lending other peoples money to “incompetent, corrupt public officials” while personally enriching themselves, personally corrupting public officials, personally walking away from the consequences of their personal actions and hanging the public with their gold plated disasters.
Problem, what problem?
The road to hell is paved with good intentions.
The answer is simple and your response is typical. Honesty and integrity are the basis for our government, as founded. Unfortunately, the truth, as exposed in your answer, is that human nature easily succumbs to temptation. In the battle between Good and Evil, Evil easily has the upper hand.
I am not being critical of you. I am just pointing out you are exposing the answer to the dilemma.
RE: The road to hell is paved with good intentions.
After reading the article, I highly doubt that the intentions were even good.
I'm sorry, but that does not fit the templated narrative in "The Rolling Stone Style Guide".
Every bad thing, from financial failure to bad weather, is due to some variant of "insufficient government".
The initial bad guy was the judge and enviros who required an over-built sewage processing plant. With current impossible regulations, “zero tolerance” and “polluter pays, the enviros get cities and counties in a squeeze where they are forced to build a state of the art facility that they cannot possibly afford.
In our small rural county, we have an old unlined septage receiving pond. The regulations are so onerous that no municipality is able to enlarge its facilities to receive the stuff because the wrath of the water board would rain down upon it in expensive redesigns and upgrades. So the County is faced with building a $multi-million facility or telling half the county’s population to literally take a hike two hours trucking distance to the next county. Imagine the fuel and pollution costs of trucking sludge down the interstate.
Unfortunately, the county has already borrowed to the hilt to close nine landfills and build transfer stations to truck all the garbage out of the county to someone else’s lined landfill because the demands/fines of the water board made a local landfill impossible. The County is at a point where it defies state agency orders on the pond while it figures out a solution because it has no other realistic choice. It has already borrowed to the hilt on the landfills and there are no reasonable infrastructure financing programs available for a septage facility.
That is how cities and counties get into trouble.
I'm wondering why the author of this article holds the "Wall Street bankers in contempt," while those who were ultimately responsible for imposing the sewage treatment requirements on the county -- the EPA and "well-intentioned citizens" from an environmentalist group get a free pass.
I would venture to guess that there's a reason why this county never had a modern, state-of-the-art sewage treatments plant before 1996: It didn't have the financial means and/or the technical expertise to: (a) determine what kind of sewage treatment facility best suited their needs and their finances, (b) figure out how to finance the construction and operations of the facility, and (c) get it built.
None of this has changed since 1996. The county still can't afford a modern, state-of-the-art sewage treatment plant and still can't figure out how to build and operate one. The only difference is that now they have one, whether or not they can even afford it or operate it.
RE: The initial bad guy was the judge and enviros who required an over-built sewage processing plant
Here’s a theoretical question... what if we had county executives and mayors with BALLS you tell the judges to back off because the town/city/municipality DOES NOT HAVE the money to implement their grandiose plans? And what if the residents supported their leaders?
What can the judge do?
The article puts part of the blame on “A mob of corrupt local officials” but fails to name names and point out party affiliation. What should the reader conclude from this?
Ping for later.
When is it ‘Cairo time’ on Wall st.?
QUILCENE The Dabob Bay Natural Area near Hood Canal has been bolstered with the addition of 604 acres of forestland and 10 acres of shoreline, all placed into permanent conservation status. QUILCENE The Dabob Bay Natural Area near Hood Canal has been bolstered with the addition of 604 acres of forestland and 10 acres of shoreline, all placed into permanent conservation status. Roughly half the land was taken out of Common School Trust status and placed into Natural Resources Conservation Area status. The state Board of Natural Resources compensated the school trust fund with $3 million, the value of the standing timber. That money came from a legislative appropriation and will be used for school construction. A legislative appropriation equivalent to the value of the underlying land $581,000 will be used to purchase replacement lands for the Common School Trust.
A thousand dollars an acre, what a deal. The school trust used to be land and the trees and crops on, it logged and sold to fund education. Now they take money from taxpayers, buy off the resource that was a steady source of income for the state schools, and put it permanently off of the tax rolls of the state. You and I both know, for anyone to acquire another 600 acres of land from a private party, will cost vastly more to replace this plot. Something like this happened in our city a few years ago. The city built a sewer treatment plant at an expanded cost from estimates. The neighborhood was affected because of there being no lid on the cooking tank. The smell was horrible, and affected a large swath of private homes. The city spent millions more putting a lid on the tanks, and the average sewer bill soared to over $50 a month, from $15, of course tied to water usage. The smell still was too much for people to tolerate, so the housing began to be rented out at discount rates. The neighborhood devolved into very low income, and drug housing. The govt then decided to buy out the homes, to create a "smell easement". After bulldozing the 54 homes affected, the city rezoned the land commercial, sold it to a car company for $2 Million dollars, well under its value as it is now being used.
The point being, govt used the system to both tax citizens to the breaking point, ruined taxpayers homes, then used the process again to make a profit for them. In the meantime, the unions, construction companies, the sewer district and a car lot both made out like bandits. I am quite sure elected officials did to.
Unrestrained govt, fleecing citizens from Alabama to Washington.
No, I didn’t think you are being critical.
Without a moral foundation, the situation this country finds itself in, is not a surprise. It is rather basic, isn’t it?
At first, the regulations were reasonable. Like anything else in government, though, they eventually became unreasonable. It has taken nearly 40 years for that to happen. But now, the runoff from RAINWATER has to be treated in some of the largest cities. It will spread to the smallest ones in a few years. After that happens, who knows what the EPA will require then. I am sure they will not stop.
I have thought about this many times trying to make sense of the relationship between the Feds and the States (and counties, and cities, for that matter). There is no doubt in my mind that what was being done before the late 1960’s was wrong. It was immoral. It is not right to contaminate the drinking water of everyone downstream of a place even though it is cheaper for them to dump crap in a nearby stream instead of treating. There was a need to have the Feds step in since local governments refused to do that. However, how do you stop the Feds once they get started down this path?