I've been a critic of the new convention center project in the past because the Mayor's Office was unwilling to go the extra mile to incorporate a 24/7 neighborhood south of Broadway into the project and because Metro funds for our services were obligated as insurance to get financiers to approve the project. Since the bank-induced recession set upon us a few years ago, I've also warned that the Music City Center's main financier, Goldman Sachs, should be suspect in its handling of financing for the project. Where is the caveat emptor?
June's Rolling Stone politics piece by Matt Taibbi on the conspiracy by the banking "cartel" to pilfer wealth from municipal bonds issued out of places like Nashville makes me even more concerned about our capital projects, and especially the largest capital project ever launched here, MCC:
these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from "virtually every state, district and territory in the United States," according to one settlement. And they did it so cleverly that the victims never even knew they were being cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime ....
In the years since the economic crash of 2008, we've seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordinated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – "an open-and-shut case of anti-competitive behavior," as one former regulator described it.
More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world's most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.
Taibbi goes into detail describing the charges that cities and towns were gored for revenues slowly and deliberately for years. As the federal prosecutor put it, banking grifters colluded to lie to and cheat municipalities through a bidding process that was supposed to protect the latter.
So, I ask again, should we just blissfully assume that Nashville, especially during Karl Dean's tenure of breathless capital spending and bond issues, has not been the mark in the banks' confidence game? Why does Goldman Sachs get the benefit of the doubt, given their checkered past?