May 26, 2014
Fix LA, a coalition of labor unions, recently reported that the City of Los Angeles handed over 204 million dollars in “fees” to Wall Street banks in 2013, while it budgeted only 163 million dollars to fix and maintain L.A. roads. That is, the city paid Wall Street banks more in fees than it allocated for a vital service.
These Wall Street fees are charged under various categories including investment management fees, bond issuance costs, remarketing fees, letters of credit, interest rate swap payments, securities lending income split fees, and natural gas swaps. Such a rich variety of fees with colorful titles show that Wall Street is very inventive in charging the city.
Some fees are undocumented since they involve deals with “private” firms and cannot be disclosed due to secrecy clauses in the contracts. Fix LA predicts that these hidden fees can easily be twice as much as the documented fees.
This is how Wall Street sucks the life out of the city. To pay for these schemers, the city has cut hundreds of millions of dollars from critical services. It stopped inspecting sewers, resulting in twice the number of sewer overflows. Most roads are not maintained or repaired. The city also cut its work force, and imposed pay freezes and cuts to pensions and health benefits. And, it has not restored any services it cut since the so-called recovery began.
Working people paid for all these services. But, we are not benefitting from what we paid for. The reason is that the city officials channel this money to Wall Street thanks to various financial set-ups.
Pick-pockets would be jealous of these Wall Street scam artists.