Reaping the whirlwind of a decomposing crony capitalism

Banksters Rob States and Cities Too

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By Margaret Kimberley

The $17 trillion dollar transfer from federal coffers to the pockets of Wall Street banksters didn’t happen in a vacuum. The same bipartisan cast of players have had their wolvish way with sheepish state and local governments for a long time now. They have honed their expertise at extracting piles of cash from cities, counties, towns and states in return for little or nothing, while the absence of news coverage hides a golden age of corporate financial corruption.  It’s not just federal any more, if it ever was….

The citizens of this country are under siege from a group of master thieves. They must be constantly on the alert for the likes of Goldman Sachs, JPMorgan Chase and others of that ilk who now exist only to steal from the public. The infamous federal bailout is not the only example of the public bankrolling the investment banks. The crimes continue with the collusion of state and local governments across the country.

The state of New Jersey [1] is paying $1 million per month for nothing, that is to say for bonds that don’t exist because they have already been redeemed. In 2003, New Jersey’s Transportation Trust Fund Authority (TTFA) sold $345 million in auction-rate bonds. While New Jersey replaced the debt with fixed-rate securities in 2008 after the $330 billion auction-rate bond market froze, the swap, in which two parties exchange fixed payments for ones based on floating interest rates, isn’t scheduled to expire until 2019. Interest rates have risen, but New Jersey can’t cancel the agreement before 2011 without paying a $36 million penalty. In the mean time, the state will continue to pay $1 million per month for nothing.

None of the parties involved now knows how this scheme came to fruition. John McCormac, treasurer of the state when the dead was done, can’t remember anything about it today. “I have no recollection of anything. Ask the treasurer.”

The man who should be able to explain anything about Goldman Sachs is New Jersey’s governor, Jon Corzine. Although this deal predates his term in office, Corzine was once the chairman of Goldman Sachs. He should be able to explain succinctly how interest rate swaps, or any other exotic financial instruments work. Yet like the erstwhile treasurer, he too is perplexed. “I’m sure there’s an explanation. They don’t just send money out.” But that is exactly what has happens when casino capitalism fixes its gaze in the direction of the public trough. Goldman Sachs and its ilk are predators who know a victim ripe for the picking when they see it.

Governor Corzine may shrug his shoulders and feign ignorance about the activities of his former employer, but he has a quick solution to the shortfall in TTFA funding. He proposes raising the gasoline tax by 14 cents. It is bad enough that Goldman Sachs stole from the state of New Jersey, now New Jersey steals from its own residents as a means of masking its role as accessory to theft.

New Jersey is not the only willing governmental victim of casino capitalism run amok. Birmingham, Alabama mayor Larry Langford [2] has been charged with 60 counts of money laundering and bribery. Langford took money, watches and designer clothes in return for turning over his city to the same banksters who looted New Jersey.

In the case of Jefferson County Alabama, which includes Birmingham, it was JP Morgan Chase who took the public to the cleaners. Chase claimed that the interest rape swaps would lower interest rates. Instead, as in the case of New Jersey, rates rose as the credit market crashed in 2008. Debt payments for the Jefferson County sewer system doubled to $460 million per year, twice the annual revenues of the system. Residents of Jefferson County are now paying four times as much [3] for water usage as they were paying one year ago. They cannot flush their toilets or turn on a faucet without paying the price for an unholy alliance between corrupt bankers and corrupt politicians.

Langford is just the latest black politician to make a mockery of the decades long fight for political power. He is accused of being nothing more than a cheap crook who chose to wear rolex watches and expensive clothes when he should have been protecting the public’s money.

It is ironic that Jon Corzine is a figure in one of these scandals. Corzine has represented New Jersey as a senator and now as governor running for re-election. In the good old days before the market meltdown, Corzine would spend up to $60 million [4] of his own money on a campaign. These days Corzine has to raise funds like other politicians do. He will spend a mere $25 million on this year’s campaign. How the mighty have fallen.

It used to be that banks were the victims of robbery. Now they are the robbers themselves. Langford is in court because of sloppy and obvious theft, not because the system that gave him an opportunity for greed has changed at all. As Black Agenda Report has already pointed out [5], “Greater Wall Street has become a Black Hole of its own creation. It now sucks all remaining and potential national wealth into its infinite darkness.”

New Jersey and Birmingham are but two of the examples of the ongoing decline of the United States. With theft at the top fully supported by the political class, the only question is will the decline be fast or slow. Its existence is not in doubt at all.

Margaret Kimberley’s Freedom Rider column appears weekly in BAR. Ms. Kimberley lives in New York City, and can be reached via e-Mail at Margaret.Kimberley(at)BlackAgandaReport.com.

Source URL: http://www.blackagendareport.com/?q=content/banksters-rob-states-and-cities-too

Links:
[1] http://www.bloomberg.com/apps/news?pid=20601087&sid=al5.EHL9NEBQ
[2] http://features.csmonitor.com/politics/2009/10/23/did-larry-langford-bet-birminghams-future-on-wall-street-scheme/
[3] http://www.alternet.org/workplace/143485/after_the_billionaires_plundered_alabama_town,_troops_were_called_in_…_illegally?page=entire
[4] http://www.nytimes.com/2009/07/17/nyregion/17corzine.html
[5] http://www.blackagendareport.com/?q=content/great-black-hole-casino-capitalism
[6] http://www.addtoany.com/share_save?linkurl=http://www.blackagendareport.com/?q=content/banksters-rob-states-and-cities-too&linkname=Banksters Rob States and Cities Too