U.S. states and cities battle Wall Street over bond ratings

[flashl]

Source: International Herald Tribune

Does Wall Street underrate Main Street?

A growing number of U.S. states and cities say yes. If they are right, billions of taxpayers' dollars - money that could be used to build schools, pave roads and repair bridges - are being siphoned off in the financial markets, where the recent tumult has driven up borrowing costs for many communities.

A complex system of credit ratings and insurance policies that Wall Street uses to set prices for municipal bonds makes borrowing needlessly expensive for many localities, some officials say. States and cities have begun to fight back, saying they can no longer afford the status quo given the slackening economy and recent market turmoil.

Municipal bonds, often considered among the safest investments, sank along with stocks last week, darkening the already grim mood in the markets. Several big hedge funds unloaded bonds as banks further tightened credit to contain the damage from mounting losses on home mortgages and other loans.

IHT

Read more: http://www.iht.com/articles/2008/03/03/business/bonds.php

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Every, financial and legal admonishment of incompetence, naiveté, over-spending or buyer beware, used to address irresponsible sub-prime borrowers will pale in comparison as revelations continue to shine a bright light onto Wall Street’s fleecing of cities, municipals, and states.

[DeepModem Mom]

1. K&R

[wellst0nev0ter]

2. Or, They Could, You Know, Take Responsibility And Raise Taxes

Instead of credit-carding the bonds to death.

Just a thought.

[Javaman]

3. The cavity of our society...

we are rotting away a little bit each and every day. borrowing from paul to pay peter. stealing away from the towns and cities to prop up the wealthy investors, defaulting on pension plans, 401Ks vanishing before our eyes, seniors borrowing off the equity of their homes to pay for food, the credit crush to stave off for one more day foreclosure.

Ahhh, nothing like morning breath in america. brought to you by bushco*: they don't make the products you don't need, they just make you believe you need them...at inflated prices.