He might be over the top but it's always great reading Rolling Stone journalist Matt Taibbi. One example is last year's piece attacking Goldman Sachs, where he described it as a "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."
Check his latest piece Looting Main Street which rips into the way JP Morgan conned Jefferson county in Alabama into some crappy interest swap deals that left it $5 billion in debt. As a result, it was forced to close courthouses, jails and sheriff's precincts so that Wall Street banks could be paid.
It's a classic case of Wall Street looting Main Street.
As Taibbi tells the story, the sewer system in Jefferson County was so old and in such bad repair that it spewed crap into the Cahaba river. As a result, they decided to fix the system. The original price tag was $250 million but that blew out to $3 billion as the contractors and Wall Street moved in. JP Morgan brought in synthetic interest rate swaps to ease debt repayment. All that did was cost the county a lot of money and postpone the problem rather than actually dealing with it so that county officials could get through the next election year. You would have to be crazy to enter a deal like that. Either that, your banker is JP Morgan.
Then there was an Alabama wheeler-dealer named Bill Blount who took bribes to allow deals to be pushed through, earning him about $3 million. Taibbi writes: "For years, when Wall Street banks wanted to do business with municipalities, whether for bond issues or rate swaps, it was standard practice to reach out to a local sleazeball like Blount and pay him a shitload of money to help seal the deal. "
Taibbi also tells how JP Morgan paid Goldman Sachs $3 million just to "back the fuck off" so they could be the sole firm in the county doing business, an apparent violation of pro-competition laws. Blount made $300,000 out of that that deal.
Still, JP Morgan should not carry all the blame. As Taibbi says, a lot of it rests with the greed and financial mismanagement of Jefferson county officials. "In the end, though, all this bribery and graft was just the table-setter for the real disaster. In taking all those bribes and signing on to all those swaps, the commissioners in Jefferson County had basically started the clock on a financial time bomb that, sooner or later, had to explode. By continually refinancing to keep the county in its giant McMansion, the commission had managed to push into the future that inevitable day when the real bill would arrive in the mail. But that's where the mortgage analogy ends – because in one key area, a swap deal differs from a home mortgage. Imagine a mortgage that you have to keep on paying even after you sell your house. That's basically how a swap deal works. And Jefferson County had done 23 of them. At one point, they had more outstanding swaps than New York City."
It's a tale that pretty well sums up what happened to America.
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