Taxpayer Money: Banks Take $211 Million In Fees For Bond Auctions That Never Happened

Bloomberg:

March 10 (Bloomberg) -- From Carnegie Hall in New York to the Los Angeles bus and subway system, American taxpayers are paying investment banks millions of dollars in fees for bond auctions that never happened.

State and local governments will spend about $211 million this year for the failed sales, based on the 0.25 percent average annual fee charged on the $84.5 billion of outstanding securities, according to data compiled by Bloomberg. The bonds - - long-term debt with interest rates reset through auctions every 7, 28 or 35 days -- typically require issuers pay their bankers even if auctions fail.

Read the whole story: Bloomberg

Comments

[Davwbaird]

damn

[robinhood1]

Why did the municipalities and non-profits agree to these auction rate securities to start with? They could have simply issued 20 or 30 year fixed rate tax-exempt bonds (on which they were already getting a tax subsidy) and called it a day. Instead, they learned nothing from Orange County, CA's bankruptcy in 1994 and entered into these exotic financings which they probably did not understand. As we are now learning, many sectors of the financial world need a regulatory overhauling, not just the large banks.

[Justinpassing]

The system is so terribly slanted in favor of the markets already that it is truly fraudulent if you barely peek under the first layer..... nooh not hardly that deep, this one's right out in the open. But our buddy, ol' Barney Frank will see us through,,,,, He is working hard to get the "up-tick rule" reinstated because it is one more advantage to give to the market since Barney has not noticed how one-sided it already is anyway, and since so many of us dedicated Democrats have our fortunes invested heavily with the stock market. RAAH RAAH Barney, way to be spectacularly perceptive.

[JZ735]

How dare you criticize Barney! Heresy at Huffpo...
But thanks for some non-partisan BS, such a rarity here.

[Rosewren]

Isn't this a rackett??

[PhilipTaylor]

MORE Bankster Corrupt practices robbing the Taxpayer and Philanthropists!

A MAJOR part of this is the FEE CRISIS by the BANKSTERS who Charge for everything from this to Hidden Fees in Derivatives, to hidden Mortgage Fees, Hidden Commissions and Fees, and many more layered into every service and product.

These are the FEES they SKIM off for exorbitant Salaries and $10 to $100 Million Christmas Bonuses! They think nothing of it as it has evolved and they think they deserve it. Hence the SanSilly poll on the floor of the exchange.

[sophistwatch]

I want to make it clear that I will not do what I am supposed to do with any money the government is willing to give me. Why am I the only one missing out on this multi-trillion dollar bonanza?

[garystartswithg]

jeez -- you aren't a big corporate bank! you have to gain the trust and savings of milliions and then pilfer it all in meth driven frenzies with prostitutes of your prefered sexual orientation, or ponzi schemes, or just plain enslavement of your debtors. until you can do that you don't get anything. pay attention during the next depression will ya?

[jms2qc]

Shouldn't someone do something about the law that says local/state gov still having to pay bankers even if bond auctions fail?

[Baltotoast]

Because it's not a law, it's in the agreement these parties were stupid enough to sign. They, in effect, agreed to pay for non-performance.

[research]

Time for a unity Central US bank under Treasury control.

[HamletsMill]

WE HAVE ALL BEEN HERE BEFORE IN 1912.
Maybe we will learn something this time?
http://yamaguchy.netfirms.com/7897401/lindbergh/lindb_index.html

ELLEN BROWN VIDEOS ON THE EVENTUAL SOLUTION - Nationalize the Federal Reserve
http://www.youtube.com/watch?v=QU0XiklHPMc

[MyTake]

Good Post.

Just before creating a TRUE U.S. Central Bank, you first have to put the interlocked organizations of The Council on Foreign Relations, The Bilderbergs and The Trilateral Commission out of business first. They are the core of the problem.

Reference: Tragedy and Hope, Prof. Carrol Quigley, 1967 (pp 950 - 970).

[dadw5boys]

Local Government with no guts to tell Bankers to SHOVE IT.

After all the Local Officals do not take a hit.

[SurrealPumpkin]

Can the banks demand repayment in full for the bond issue if the issuers refuse to pay the auction fees?