Across the nation, local governments and related public entities, already reeling from the recession, face another fiscal crisis: billions of dollars in fees owed to UBS, Goldman Sachs (GS), and other financial giants on investment deals gone wrong. Full Story »
Posted by Kaizar Campwala - via Business Week
Highly recommended read about how governments and municipal entities also fell pray to Wall Street's financial instruments, and are how suffering the consequences. with multiple examples, this piece shows a range of government and municipal entities with varying levels of culpability, all of whom paying Wall Street big money.
“The banks stuffed customers with [questionable investments] and then extorted money from the customers to get rid of them,”
The financial struggles of America’s cities and towns stand in stark contrast to Wall Street, where bonuses at some firms are expected to reach record levels in 2009, less than a year after the peak of the financial crisis. To keep public outrage from reaching a boiling point, banking chiefs are embarking on a charm offensive. Goldman CEO Lloyd Blankfein, who recently sparked controversy when he told a Times of London reporter that his firm was “doing God’s work,” pledged on Nov. 17 to invest $500 million in small businesses and charities. (That amounts to roughly 3% of the $16.7 billion Goldman expects to pay its employees this year.)
Without a federal fix, strapped municipalities like Detroit could be forced to slash vital services even more. The city’s public schools, which had been putting off paying textbook suppliers and other vendors, aren’t likely to see their funding rise now that banks are taking a bite out of the city’s budget. The Royal Oak school district is eliminating after-school music programs and asking parents to pay $100 per child to play sports. “We’ve had to demolish programs because of the squeeze,” says Thomas L. Moline, the district’s superintendent.
