Detroit Donates Millions of Dollars to Wall Street
As well they should. So what if Detroit’s unemployment rate is 28% and climbing, and a house in Detroit probably costs less than a new car. Quit whining! If Detroit residents weren’t so wrapped up in their own petty problems, they’d be more mindful of those needy Wall Street executives.
It’s bad enough when an individual doesn’t notice something in the fine print and ends up paying surcharges and penalties. Now it’s happening to one of America’s largest and poorest cities.
Several years ago Detroit entered into a deal with UBS and several other banks, enabling the city to save $2 million a year in interest on $800 million worth of bonds. Unfortunately, on page 73 of the contract, written in a size .001 font, was a “gotcha” clause. If Detroit’s credit rating was reduced, the banks could sleaze out of the deal and demand a huge payment.
Last January, it happened. Detroit’s credit rating dropped, and now the city owes $400 million to those banks. Gotcha! If you’re a giant scumsucking parasite with no morals or ethics, times are great right now.
Detroit is now making a monthly payment of $4.2 million to the banks. The city isn’t allowed to spend one cent on schools, transportation or any other vital services until this payment has been made.
Detroit is probably the most blatant example, but this is happening all over the country. UBS and Goldman Sachs — among others — are extorting billions of dollars from local governments and public entities. As this article says:
“Many of the transactions shared a striking similarity: provisions that protected the banks from big losses and left the customers on the hook for huge payouts. Now, as many of those deals sour, Wall Street is ramping up its efforts to collect from Main Street.”
The New Jersey Transportation Trust Fund Authority and the Chicago Transit Authority are two other entities that have been suckerpunched by Wall Street.
Legislation has been introduced in Congress — by Representative John Lewis (D-GA) and Senator Robert Menendez (D-NJ) — which would impose a 100% tax on these penalty payments that the banks collect. That’s not enough, but it’s a start.
It’s not drawing and quartering, but it’ll do for now.