Jul 18, 2016
The Los Angeles city controller revealed that the City has been paying banks millions of dollars extra in interest – 54 million dollars on three projects alone from 2010 to 2015. It’s because the city issues bonds long before the bills come due, thus paying interest on the money waiting in the bank.
Not that it was a secret. The controller himself said that city policy requires departments to have enough cash to pay the full amount of contracts – including big construction contracts that take years to complete – when the contracts are signed.
It sounds like a set-up, of course, and a very profitable one for the banks. That way, banks get millions of dollars of extra interest on top of the already high rates they charge; while the contractors make fat profits off overpriced contracts.
One more way that politicians found to help big banks and companies plunder public funds.