Regarding School District Financing
Nov 5th, 2009 by Randy Toman
Swaps have three elements attached to them that should have been enough to cause school districts, using taxpayer’s money, to stay away from them.
One was the fact that the transaction operated in an unregulated financial arena with no over site by the Federal Security Exchange, second there was an element of risk that was hidden and could not truly be determined, finally the fact that swap’s operated in an unregulated financial arena they were immuned from most securities-law and disclosure requirement.
This last fact alone should have kept the school Board from the use of these types of financial tools when it came to borrowing monies all 3 elements added undue risk. Yet we have the Bethlehem Area School District steeped in and deeply involved in using these types of financial tools.
Why is this? There can be but two reasons why one would go there and/or be lead there. One is shear stupidity, the other intentional, for gain by some party, while the other is sold a bill of goods. Both reasons are dangerous to the taxpayer and warrant investigation. Both reasons should not be dismissed because there is to be repercussions and the taxpayers should have redress and it appears they don’t and/or won’t have that redress.
If you add to this dangerous situation the fact that the school board has no way of addressing the grievance posted by a taxpayer you indeed have compounded the situation into a very dangerous affair.
I have stated both privately and publicly that all swap and derivatives type contract should be terminated as quickly as possible. If the market place should start to deteriorate (seriously) with an increase in interest rates those swaps would turn toxic over night and there would be no place to unload them at that point. Besides, the School District should not be in a high-risk financial arena, not with taxpayer’s money. And to have the School Board talk about triggers to pull is shear nonsense. Waiting to have the swap turn down and/or reach a point of bailout is playing Russian roulette with all the chambers loaded with a round. Get out now while the getting is good.
We Shall See and shortly.
You are 100% correct! The school officials play games with our tax money and we’re not supposed to get hostile. They fail to educate, instead indoctrinate and we are not supposed to bring this up as a legitimate argument for privatization. Private schools give a much better education without the bull and costs about half and the dems don’t want to see the needy poor in private schools, only their kids and we’re not supposed to be concerned. Yet the people keep electing these phonies to office and we wonder why our kids are lacking in the knowledge that will provide them a chance at a good future. This has been going on for more than 50 years and now we have a dumbed down and illiterate society. They sure know how to hold out their hands for entitlements and think it is their right. Amazing what politicians will do for votes and power over the people!