Has anybody read the article in the MC about the financial scandal with the BASD?
Well, it seems that LIBOR, (London Inter-Bank Offered Rate), inflated and supressed their international interest rates which caused the BASD to lose a bunch of the taxpayers money. But that’s not all! JP Morgan and the Bank of America was involved! Surprise—– surprise! How did that happen? The BASD made “derivitive” swaps which are separate from other transactions and are done to leverage “risk”, like interest rates changing! That’s where LIBOR comes in! Well, LIBOR, JP Morgan and BOA got caught and the SEC is requiring JP Morgan to make restitution. What will happen to LIBOR? The BASD will get $1.4 million in restitution from JP Morgan and $39,477 from BOA out of ? millions lost! Wow! The district also spent $20 million to terminate most of its variable rate bond and swap transactions so they could issue safer and more secure fixed rate bonds. Who to blame? Some clues below!
“Bethlehem Area conducted 17 swap transactions — the most by any school district in the state — on five construction bonds totaling $295.4 million between 2003 and April 2009 under former Superintendent Joseph Lewis, former business manager Stanley J. Majewski Jr. and financial adviser Les Bear of Tredyffrin Township, Chester County, according to a four-part investigation published by The Morning Call in June 2009.”
“The newspaper found Bear’s firm was paid for multiple, conflicting roles, such as adviser and underwriter, with the result that his firm got most of the $25.4 million in fees. Another financial consultant, Matt Kirk of Lancaster County, was paid as an “agent” by JPMorgan at the same time he was being paid by taxpayers.” From the MC article: http://www.mcall.com/news/local/bethlehem/mc-bethlehem-schools-swaps-20120725,0,98941.story
Also see the video of Pat Toomey on this subject: http://www.youtube.com/watch?feature=player_embedded&v=hZiHRMrUmHk
The big question is: Why are these irresponsible and corrupt people not in prison where they belong, like Bernie Madoff? The banks are making a game out of suckering the tax payers by way of our local and state workers and leaders and some of them are running our educational institutions and legal apparatus? But it is not the institutions, it is the people that run them!
I’m not accusing the BASD of corruption through intent, but it does look like they slipped up due to ignorance of things financial and attempted to cover up to keep from being embarrassed, a maneuver which can quickly cross the line into something that may be illegal. The corruption occurred at JP Morgan and the BOA and then to top it off, the lawyers involved took advantage of the ignorance of the BASD and complexity of the banking tactics which are (by design) and on purpose, made to confuse the client instead of looking out for the tax payers!
Instead of stealing by using strong arm methods, the banking industry and the legal system is using “white collared crime” to do their stealing (IE: The LIBOR scandal). Much of this is due to poorly wrtten regulations that no one seems to understand. The banking system and the legal system can therefore, “twist” the laws to their benefit and to the detriment of the tax payers. The government cares little about federal and state money being ripped off because it isn’t theirs! They knew when they did away with the GLass-Stiegel act, it would open the doors for major corruption through higher risk with little control over the banking industry.
As a side note, I did hear that the former BASD superintendent Joseph Lewis and his financial advisor were good friends (conflict of interest), but that is probably just a Tea Party propagated rumor, eh?