Oh, nice!

It looks like the only chance we have to get justice over bank fraud will be these local efforts. Here’s hoping they actually go ahead with this, because it will interesting to see which local politicians are under those rocks:

After financial agreements called interest-rate swaps went south along with the economy a few years back, the city and the Philadelphia School District had to fork over millions of dollars to major banks to sever the deals.

This spring, the city retained an outside law firm to examine whether to file a lawsuit. The move followed a resolution that Councilman Jim Kenney introduced in March calling for hearings to investigate interest-rate swaps.

“Our transit agency is suffering, our schools are in a terrible situation and the city is always on the brink of financial calamity,” Kenney said Tuesday at a news conference held at City Hall to draw attention to the swap deals. “So we’re hoping that the law firm that we have engaged to look at this comes back with a favorable idea to go forward with a lawsuit to sue Bank of America, Wells Fargo and all of the others — everybody who was involved in the collapse of the economy.”

He said he hoped that a lawsuit would force the banks to come to the table to negotiate a deal that does not include “punitive payments.”

The city’s Law Department said the outside law firm — Faruqi and Faruqi — will “evaluate potential claims related to these transactions, but it has not yet reached a decision on whether to file suit.” The firm would only be compensated if the city recovered damages from a suit.

Critics of the deals say that in the early 2000s bankers persuaded local governments and schools throughout the country to purchase swaps that were contingent on the future of U.S. interest rates. But those deals went sour in 2008, when the economy crashed and governments were forced to pay banks the difference once market interest rates plummeted.

Kenney was joined at the news conference by other critics of the swap deals, the Transit Workers Union Local 234 and Fight for Philly. Organizers pointed to a report titled Riding the Gravy Train, issued this month by a group of transit advocates and workers known as the Refund Transit Coalition. The report details costs of interest-rate swaps for cities across the country and its impact on public transit systems.

Hat tip to Jason Kalafat, Attorney at Law.

2 thoughts on “Oh, nice!

  1. “When you live by the sword, you die by the sword.” In this case greedy, stupid local politicians were snookered by slick banksters into buying a pig in a poke. Two rules. 1) What goes up will come down. 2) If it sounds too good to be true, it is. Is it the bankers fault that local politicians were greedy and stupid? Nope. Is it the bankers fault that politicians who knew nothing about what they were buying into got burned? Nope. In this case “we the people” should be suing the stupid, greedy politicians and not allowing them to waste more of our money on unwinnable lawsuits filed against the bankers. Ain’t Capitalism grand!

  2. Well okay. We tried that in Georgia. Really. Very briefly, we had the strongest state laws in the nation preventing predatory lending. So in the next election, KKKarl Rove rigged the voting machines and “elected” the Republican candidate for Governor. When the new guy took office, guess which laws were the first ones he struck down.

    So good luck. Here’s hoping you folks in Pennsylvania have better luck than we did in Georgia.

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