Wall Street Plays Hardball

Taxpayers are taking another hit as strapped local governments fork over billions in fees on investments gone bad

From Business Week
November 18, 2009, 8:10PM EST

Charm Offensive
The seeds of this looming disaster were sown during the credit boom, when Wall Street targeted cities big and small with risky financial products that promised to save them money or boost returns. Investment bankers sold exotic derivatives designed to help municipalities cut borrowing costs. ... Private equity firms, pointing to stellar historical gains, persuaded big public pension funds to plow billions of dollars into high-cost investments at the peak of the market. Many of the transactions shared a striking similarity: provisions that protected the banks from big losses and left the customers on the hook for huge payouts....

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