Denver Schools Get Whacked

[paulk]

http://www.rollingstone.com/politics/matt-taibbi/blogs/TaibbiData_May2010/189565/83512

"Gretchen Morgenson of the New York Times is single-handedly resurrecting the Gray Lady's reputation as a muckraker of the first order. Having already blown a big hole in the side of Goldman Sachs with her December, 2009 story exposing its crooked deal with hedge fund king John Paulson, Morgenson this week took an ax to Colorado's Democratic Senator Michael Bennet, uncovering a Jefferson-County style scam he helped perpetrate on the Denver School system on behalf of several Wall Street banks (including primarily JeffCo villain JP Morgan Chase) while acting as Denver's school superintendent years ago.

It's not hard to figure out why these deals are popping up all over the place. X or Y politician gets into office and is faced with budgetary problems. He is then approached by Wall Street hustlers who make him a fancy offer that sounds impossible to refuse: sign on for a bond-and-swap deal now, we'll give you upfront cash to help your immediate budget problems disappear. And if the deal blows up, the blowing up will happen on someone else's watch, long after you've left office. In the meantime, here's a bribe/batch of campaign contributions/donation to your favorite PAC to help soften up your conscience.


It's a formula that allows current politicians to look like heroes even as they're sticking future politicians with irresolvable financial burdens. The problem mimics the bonus issue on Wall Street, where bankers look to score big bonuses this year by doing deals that may look good now, but in the long run may go south, affecting not them, but their company's bottom line. The geniuses at AIG who made millions in bonuses building up the world's biggest gambling debt is a classic example of this phenomenon. And when you get politicians and bankers who are both mercifully free from the ravages of conscience and are both operating on the same pitifully short time horizons, the result will be deals like this Denver thing, where it's a temporary win-win for the dealmakers and an unspeakably huge loss for taxpayers down the road.


At least in Jefferson County the principals on the government side -- in particular then-County Commissioner Larry Langford -- had the excuse that they didn't understand these intricate swap deals, as most normal human beings do not. They could at least say they thought it might all work out in the end. Not so with Bennet; he worked for years as a structured finance guy under loony Christian billionaire Phillip Anschutz (who is probably best known for having helped fund religious films like the Sam Rockwell instant non-classic Joshua and the Christ-as-lion epic The Chronicles of Narnia). So he should have known better, but clearly did not."


I wonder if Obama is still coming to CO to stump for this guy?