Build America bonds

GOP plan to bankrupt states and bust unions

Just when you think it cannot get more evil than this, news comes that it can. Via Naked Capitalism, we have this Reuters post, Secret GOP Plan to Push States to Declare Bankruptcy and Smash Unions:

Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy.

How? By denying them Build America bonds.

The most intriguing aspect of President Barack Obama’s tax deal with Republicans is what the compromise fails to include — a provision to continue the Build America Bonds program. BABs now account for more than 20 percent of new debt sold by states and local governments thanks to a federal rebate equal to 35 percent of interest costs on the bonds. The subsidy program ends on Dec. 31. And my Reuters colleagues report that a GOP congressional aide said Republicans “have a very firm line on BABS — we are not going to allow them to be included.”

No surprise since the public pension fund is one of the last hold outs for any sort of retirement, so of course it is a target. On the other hand, California, as well as Illinois refuse to deal with major costs, including their illegal immigration budget busting problems.

Goldman Sachs Made $55.7 million on Build America Bond Fees

Remember how the latest Jobs bill had yet another bail out for Goldman Sachs? How Senator Chuck Grassley was digging around on those Build American bond underwriting fees? Well Goldman Sach responded to Senator Chuck Grassley and made $54 million in fees from selling Build America Bonds, 1/3 to municipalities, and then an additional $1.7 million on adviser fees.

Bloomberg has more:

Stimulus Build America Bonds yet another gift for Goldman Sachs

Hey everybody, let's have Build America bonds to help everybody get a job! Right? Oops, guess who makes big bucks for underwriting fees? Wall Street, especially Goldman Sachs.

Sen. Chuck Grassley, ranking member of the Committee on Finance, today asked Goldman Sachs whether it would collect double-digit underwriting fees for participating in a newly expanded Build America Bonds program, as included in the “jobs” bill promoted by the Senate Democratic leaders and passed by the Senate today.

Here is Senator letter to Goldman Sachs, in which he notes Goldman Sachs put out a full page ad promoting these bonds.

February 24, 2010

Mr. Lloyd C. Blankfein
Chairman and Chief Executive Officer
The Goldman Sachs Group, Inc.
85 Broad Street
New York, NY 10004

Dear Mr. Blankfein: