hvactec
VIP Member
For space reasons we had to leave a few interesting bits out of my latest magazine piece, "The Scam Wall Street Learned From the Mafia," about widespread corruption in the municipal bond markets. The odd thing is, we might actually have undersold the damage done by this sort of cartel-style corruption.
When we called around to towns and cities affected by the rigged auctions discussed in the trial, many of the local officials were quiet, mainly because theres still pending civil litigation in many of those cases. But a few of them pointed out a little-discussed flip side to the damage caused by Carollo*-esque bid-rigging.
Bid-rigging skims from towns after theyve already borrowed money through bond issues. But some communities insist theyre being skimmed before they borrow as well. The central complaint is that the credit ratings of municipalities are excessively low, compared with counterparts in the corporate market who have the same risk of default. If true, this would artificially hike borrowing costs for cities and towns.
Read more: Notes on Wall Street's Bid-Rigging Scandal | Matt Taibbi | Rolling Stone
When we called around to towns and cities affected by the rigged auctions discussed in the trial, many of the local officials were quiet, mainly because theres still pending civil litigation in many of those cases. But a few of them pointed out a little-discussed flip side to the damage caused by Carollo*-esque bid-rigging.
Bid-rigging skims from towns after theyve already borrowed money through bond issues. But some communities insist theyre being skimmed before they borrow as well. The central complaint is that the credit ratings of municipalities are excessively low, compared with counterparts in the corporate market who have the same risk of default. If true, this would artificially hike borrowing costs for cities and towns.
Read more: Notes on Wall Street's Bid-Rigging Scandal | Matt Taibbi | Rolling Stone
