Hidden Swap Fees by JPMorgan Morgan Stanley Hit School Boards
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Feb. 1 (Bloomberg) — James Barker saw no way out. In
September 2003, the superintendent of the Erie City School
District in Pennsylvania watched helplessly as his buildings
began to crumble.
The 81-year-old Roosevelt Middle School was on the verge of
being condemned. The district was running out of money to buy
new textbooks. And the school board had determined that the
100,000-resident community 125 miles north of Pittsburgh
couldnt afford a tax increase. Then JPMorgan Chase %26amp; Co., the
second-largest bank in the U.S., made Barker an offer that
seemed too good to be true.
David DiCarlo, an Erie-based JPMorgan Chase banker, told
Barker and the school board on Sept. 4, 2003, that all they had
to do was sign papers he said would benefit them if interest
rates increased in the future, and the bank would give the
district $750,000, a transcript of the board meeting shows.
“You have severe building needs; you have serious academic
needs, Barker, 58, says. “Its very hard to ignore the fact
that the bank says it will give you cash. So Barker and the
board members agreed to the deal.
What New York-based JPMorgan Chase didnt tell them, the
transcript shows, was that the bank would get more in fees than
the school district would get in cash: $1 million. The complex
deal, which placed taxpayer money at risk, was linked to four
variables involving interest rates. Three years later, as
interest rate benchmarks went the wrong way for the school
district, the Erie board paid $2.9 million to JPMorgan to get
out of the deal, which officials now say they didnt understand.
“That was like a sucker punch, Barker says. “Its not
about the district and the superintendent. Its about resources
being sucked out of the classroom. If its happening here, its
happening in other places.
$12 Billion in Deals
It is. During the past four years in Pennsylvania alone,
banks have pitched at least 500 deals totaling $12 billion like
the one JPMorgan Chase sold to Erie, according to records on
file with the state Department of Community and Economic
Development. Most of the transactions — which occurred outside
the states largest cities of Philadelphia and Pittsburgh –
have been made without public bidding, which means that banks
and advisers privately arranged the deals with small school
districts, the records show.
JPMorgans Chief Executive Officer Jamie Dimon declined to
say if he thought the banks fee disclosure was proper and
whether the bank acted in a fair, responsible and moral manner
in Erie.
Banker DiCarlo declined to comment. JPMorgan spokesman
Brian Marchiony says the deal gave the school district immediate
debt savings and protected it against unpredictable interest
rate risk in the future. He declined to answer specific
questions.
Overpaying Fees
The Pennsylvania transactions involve interest-rate swaps,
which are derivatives. Derivatives are financial contracts whose
value is based on other securities or indexes; interest-rate
swaps are tied to future changes in lending rates.
The Pennsylvania deals show that school districts routinely
lose when making derivative deals. They pay fees to banks that
are as much as five times higher than typical rates and overpay
advisers by as much as 10-fold. That means banks often underpay
schools on upfront amounts, as JPMorgan Chase did in Erie,
public records show. And school officials arent always well
served by their supposedly independent advisers, whose fees are
paid by the banks selling the deals — only if the sale is made.
`Getting Fleeced
In 15 Pennsylvania school districts, officials entered into
interest-rate-swap deals worth $28 million since 2003, according
to data compiled by Bloomberg. Of that dollar amount, the
schools took in $15 million, and banks and advisers got the rest
as fees, Bloomberg data show.
“The school districts are getting fleeced, Pennsylvania
Governor Edward Rendell says. The governor, 64, a Democrat who
has been in office since 2003, says the state might in the
future advise schools and municipalities on derivatives
contracts before they sign with banks. Christopher Cox, chairman
of the U.S. Securities and Exchange Commission, says hes
concerned that municipalities are taking on more risk than in
the past when they raised money primarily from bond sales.
“Its a serious issue, not only in Pennsylvania but across
the country, says Cox, 55, who has headed the SEC since 2005.
“That is what we have seen repeatedly. More often than not, the
municipalities arent configured to have financial sophisticates
in charge of these offerings — and the result is that the firms
are the only ones who know whats going on.
Just five years ago, municipal derivative deals werent
sanctioned in Pennsylvania, the sixth-most-populous U.S. state.
Then, in September 2003, the state Legislature adopted a law
allowing schools and towns to use interest-rate swaps to lower
borrowing costs and raise cash.
Exchanging Payments
In a swap, two parties agree to exchange payments over a
period of time that can last as long as 30 years. Typically, one
agrees to pay a fixed rate and the other to pay a variable rate
that changes with a benchmark index or formula defined in the
contract.
Public agencies can benefit by using derivatives to guard
against swings in borrowing costs or to lock in current interest
rates for bond sales they might not make for years. In many
cases, school districts use swaps as a way to refinance bonds
theyve issued in the past.
Derivative deals can bring banks fees three times higher
than the traditional selling of municipal bonds, public records
show. School districts dont know whether theyre getting fair
market values with swaps because the contracts are private; they
dont know how to compare their deals with those done by other
districts.
`Profits Are Greater
This lack of transparency is a boon for the banks, says
Christopher “Kit Taylor, executive director from 1978 to 2007
of the Municipal Securities Rulemaking Board, a panel that
issues rules on municipal bond sales.
“Business moves from transparent and competitive markets
to markets where there is less transparency and the profits are
greater, he says. “If you dont know how much youre paying,
youre going to be paying too much.
The Pennsylvania swap law was passed after lobbying by
financial advisory firms that stood to profit from such deals.
The legislation made the state a member of an expanding
club. Forty states give government bodies explicit authority to
make derivative deals, up from none 20 years ago, says David
Taub, a lawyer who specializes in derivatives and is a partner
at McDermott Will %26amp; Emery in New York.
Derivatives arent regulated by the SEC, the MSRB or by
states. Pennsylvania offers a clear look at these deals because,
by law, all the contract records must be publicly filed with the
state.
Pennsylvania Adviser
One derivative advisory firm that backed the Pennsylvania
swaps legislation is Investment Management Advisory Group Inc.,
or IMAGE. The Pottstown, Pennsylvania-based company was raided
by the Federal Bureau of Investigation in November 2006 in
connection with a criminal antitrust investigation of bid
rigging of investment contracts that are sold to states and
municipalities.
The U.S. Justice Department is also probing municipal
derivative deals. IMAGE has said its cooperating with the
probe. No charges have been filed.
In some Pennsylvania transactions, banks bought from school
districts rights to exercise options on an interest-rate swap,
or swaptions. Banks can choose to exercise the option if they
stand to make money or can let the option expire if interest
rates arent favorable to them.
Banks Hedge Risk
The banks that arrange these deals create the swap
contracts before pitching them to schools. Using software
programs designed for valuing swaps, they calculate prices for
which they can sell them after a school signs a contract. Thats
how the banks make money. For example, if a bank agrees to pay a
district $800,000 in a deal it valued at $2 million, it could
reap $1.2 million for itself and middlemen.
“They load it off instantly, says Taylor, whos now on
the advisory board of Rockwater Municipal Advisors LLC, an
Irvine, California-based investment firm.
Banks hedge their risk in derivative deals by making trades
to cover possible losses to school districts. The banks make
their money from fees, regardless of interest rate movements.
The reason Erie and other districts dont know how much the
bank makes from a deal is because banks dont tell them, the
records show. The money isnt paid immediately out of school
budgets. Fees are hidden from schools because banks include
those costs in the contract by adjusting interest rates up or
down.
SEC Disclosure Rules
While the SEC doesnt regulate derivatives, it has
authority to oversee how banks conduct transactions. SEC
Chairman Cox says all financial firms should tell clients what
their fees are before signing any deals.
“Brokers and advisers should disclose their compensation
and conflicts of interest to their customers, and to the extent
that they are regulated by the SEC, they must, he says.
Cox also says school district officials have a
responsibility to the public and to bond investors to ensure
their advisers are actually independent and acting in the best
interests of taxpayers. “To the extent that municipalities are
participating in transactions they are not qualified for, there
is an obligation to get good independent advice, he says.
More than two dozen Pennsylvania school districts bought
swaps that bet on the spread between two interest rates. Many
bet wrong. Since 2006, at least 27 school districts gambled that
the spread would widen between either the five- or 10-year
London interbank offered rate on the one hand and weekly
municipal bond yields or the one-month Libor on the other.
The opposite happened: Spreads narrowed as long-term
interest rates fell. The schools had to pay banks, or they could
pay a steep exit fee, as Erie did with its swaption to cancel
the deal.
Historical Fluke
School district officials say their advisers have told them
the contracting of the spreads was a historical fluke. In the
Exeter Township School District, 55 miles (88.5 kilometers)
northwest of Philadelphia, Financial S%26amp;lutions LLC told the
schools their swap deals shouldnt have lost them money.
“They tell me thats never happened before, says Ernest
Werstler, who was business manager of the district until
November, when he retired. “Its happening to us now.
Financial S%26amp;lutions didnt respond to requests for comment.
Deane Yang, head of research at financial advisory firm Andrew
Kalotay Associates Inc. in New York, says local officials are
putting too much stock in financial advisers who are paid by
banks–and in many cases are referred to schools by banks.
“Its like trying to decide whether a used-car dealer is
offering you a good price or not, says Yang, who doesnt work
with school districts. “Theres a car appraiser down the street
who tells you he will provide an independent evaluation. But
hes paid only if theres a sale.
`Pound Someones Brains
School board members usually have a poor understanding of
derivatives, says Peter Egan, a financial adviser and former
public finance banker at a unit of Cherry Hill, New Jersey-based
Commerce Bancorp Inc.
“A derivative is a very powerful tool, says Egan, whos
now managing director of Bordentown, New Jersey-based Phoenix
Advisors LLC, which advises local governments on bond sales.
“Its like a hammer. You could use it to hammer in a nail with
perfect precision. But you could also use it to pound someones
brains out.
In many cases, the banks repeatedly sell more derivatives
to replace old ones. In Bethlehem, Pennsylvania, JPMorgan and
Morgan Stanley sold the school district eight swaps on just two
bond issues, records show.
Outside Advice
“It sure looks a lot like churning, Yang says. Churning
is a term used to describe how stockbrokers or insurance agents
sometimes continually sell and resell the same or similar
products to clients in order to make more in fees. “Doing more
than one swap against a single bond issuance definitely
benefited the swap adviser and bank, but probably not the school
district.
In Pennsylvania, its the financial advisers who are
supposed to keep school district officials from getting fooled.
Thats why the 2003 law allowing for swaps requires districts to
use independent advisers.
“There was a fear that these deals were being pushed on
the unsuspecting, perhaps, without them getting any other
advice, says Steve Nickol, a Republican member of the
Pennsylvania House of Representatives who introduced the
legislation.
Lobbyist Leads Change
Financial advisers — especially IMAGE, which opened in
1992 — backed the swaps bill from the beginning. At an Oct. 16,
2002, hearing in Harrisburg, the state capital, Rick Frimmer, a
public finance attorney, and Martin Stallone, managing director
of IMAGE, said swaps would save taxpayers money. Since 1998,
IMAGEs founder, David Eckhart, has personally contributed
$469,400 to Pennsylvania elected officials, political action
committees and candidates for office, campaign records show.
IMAGE said in a written response to questions that the firm
never lobbied for the law. It said Eckharts contributions had
no bearing on the 2003 legislation.
Nickol says he was first approached about approving swaps
for school districts and municipalities in 2002 by Elmer Heinel,
a public finance lobbyist whose clients have included bond
underwriters Meridian Capital Markets Inc., Stallones former
employer, and Wheat First Securities Inc.
Authority to Buy
Heinel has contributed $141,245 since 2000 to state
lawmakers, political action committees and candidates running
for office. Heinel says the donations werent tied to the
legislation.
The law gave cities, counties and school districts the
explicit authority to buy swaps.
Municipal derivatives had been gaining ground in other
states, as well as in large cities such as Philadelphia and at
agencies like the Pennsylvania Turnpike Commission, as a means
to lower borrowing costs, Stallone told the legislature at the
time. The law passed 197-0 in the House and 45-0 in the Senate.
“There could be huge cost savings for many of the local
governments, Nickol said. Rendell signed the bill in September
2003. That same month, the Erie school district signed the
swaption deal with JPMorgan.
Erie Buys In
Once an iron and steel center, Erie is now left with
shuttered factories and an aging population. While General
Electric Co.s $4 billion transportation unit, which mainly
builds locomotives, maintains its headquarters in Erie, much of
the citys manufacturing base has disappeared.
Since 1970, the citys population has declined 30 percent.
Seventy-six percent of students in the district are eligible for
free or reduced-price lunches, according to the state Department
of Education.
JPMorgan and IMAGE had pitched the swaption to the school
board in June 2003. JPMorgans DiCarlo and IMAGEs Mike Garner
said at that meeting the district had locked in high interest
rates in 2001, when it issued $38.7 million in bonds, according
to an audiotape of the June 17, 2003, meeting.
In the two years after that, interest rates had declined.
Using traditional bond financing, the district couldnt take
advantage of the lower rates because tax law prohibited
refinancing before 2011, Garner said.
Money Now
By agreeing to a swaption with JPMorgan, the district could
cash in immediately, Garner told the board. The bank would make
an upfront payment to Erie. In return, the school allowed the
bank to enter a swap with Erie in the future, from 2011 to 2029.
The value of the swap hinged on four factors: the length of
time before the option was exercised, credit market expectations
of future interest rates, the relationship between a fixed rate
to be paid by Erie and changing interest rates and volatility of
lending rates.
The bank could choose to exercise or decline the option.
The school district had no say in that decision.
JPMorgan had recommended IMAGE to the school districts law
firm, Knox McLaughlin Gornall %26amp; Sennett PC, says Tim Sennett, a
partner in the firm who worked with the school district on the
derivatives deal. IMAGEs Garner told school board members he
thought the district should make the deal.
Risks Are Reasonable
“Given your situation, the economics are very good for the
district, Garner said, according to the tape of the meeting.
“The risks are reasonable. I believe everyone on the board has
a good grasp of what the risks are.
The board didnt make a decision that day. “This was a new
concept wed never heard of, says Richard DAndrea, the
districts business administrator. “Given the tight budget
situations that were always under, thats a very strong
motivation to help balance the years budget.
On Sept. 4, 2003, as a new school year was starting, the
board met again with DiCarlo, who said the district should sign
the deal and the bank would give it $750,000. Board members
asked DiCarlo how much the bank would make in fees.
DiCarlo said, “Everybody has asked, and its a reasonable
question: What does JPMorgan, what do we get on this
transaction? I cant quantify that to you, according to a
transcript of the meeting.
$2 Million Asset
DiCarlo, who was a state representative from Erie from 1973
to 1980, didnt tell the board that the contract was worth $2
million in global derivative markets. Based on interest rates
that day and terms of the deal, Bloomberg data show that was the
value of the contract.
JPMorgans gross markup on the swaption was 0.82 percentage
point of the rate compared with a 0.16 percentage point charge
Goldman Sachs Group Inc. collected from the Philadelphia School
District on a comparable swaption the city had bid competitively
in March 2004.
In a written response to questions, IMAGE disputed the
amount of fees paid to JPMorgan. “The numbers your analysis
produces for the districts are clearly way off the mark, it
wrote.
IMAGE said it didnt know the banks fees, estimating they
were $365,000-$495,000. IMAGE said it doesnt know who
recommended the firm to Erie as an adviser. “Regardless, there
are no conflicts, IMAGE wrote. IMAGE said its fees were normal
for the industry.
Two-Page Opinion
DAndrea says he relied on assurances from IMAGE that the
deal was right for the district. IMAGE wrote a two-page opinion
saying the deal was fair. It didnt say how much the fees were,
according to a copy obtained under a public records request.
“The net swaption premium to the district was adjusted to
reflect the forward starting and option-adjusted nature of the
swaption, a reasonable hedging spread in the Libor markets and a
fee to JPMCB reflective of its time and effort dedicated to the
district as well as the inherent credit, operational and market
underwriting hedging risk of the transaction, it said. Board
member Eva Tucker, a retired professor of geoscience at Penn
State Universitys Erie campus, says the board didnt fully
understand the deal and trusted IMAGE, which recommended the
transaction.
“Were not financial experts, Tucker, 72, says. “We
relied on the best advice we thought we could get.
James Herdzik, a school board member who works as a sales
manager at a machine shop, says the district couldnt turn down
the deal because it was desperate for money.
“Were scrambling for every penny we can get, Herdzik,
48, says. The board approved the deal in a 6-0 vote.
Paying to Cancel
JPMorgan actually gave Erie $785,000 — $35,000 more than
DiCarlo had promised. The bank paid IMAGE $60,000, gave bond
insurer Financial Security Assurance Inc., known as FSA,
$57,585, paid lawyers and other middlemen $106,000 and kept $1
million as its revenue, according to public records and
Bloomberg data.
By June 2006, the swaption had left Eries district with a
$2.9 million liability because expectations of future short-term
interest rates had risen, narrowing the difference between
future costs to borrow for one year and for 30 years. In July
2006, the district paid JPMorgan $2.9 million to terminate the
swaption.
The district got the cash from the proceeds of two new
derivative deals it did with Pittsburgh-based PNC Financial
Services Group Inc.s PNC Capital Markets unit. The transactions
paid Erie schools $732,000 up front. One deal was an interest-
rate swap that so far has lost $32,000 for the district,
according to local records.
Most In Need
Erie revised the terms of the swap in October 2006, betting
that beginning in March 2008, long-term rates would rise faster
than short-term rates. The other deal is a swaption; PNC hasnt
exercised the option yet.
Herdzik says he cant see why banks would take advantage of
struggling school districts.
“Its kind of like preying on the municipalities that are
most in need of money, he says. “Its like we got raped.
Other Pennsylvania school districts are paying banks
excessive fees. Bethlehem, 50 miles north of Philadelphia, is
also a former steel-making center. With a population of 72,000,
the city has maintained its historic buildings.
The Central Moravian Church is a symbol of the group that
founded the city on Christmas Eve in 1741. In the industrial
area of the city, Las Vegas Sands Corp. is converting an old
steel mill into a casino.
Money-Making Plan
Bethlehems school district has used derivatives to try to
make money. At an April 2005 meeting, Les Bear, of advisory firm
Arthurs Lestrange %26amp; Co. in Pittsburgh, told the school board by
arranging two interest-rate swaps tied to $110 million in bond
issues, the 15,350-student district could generate more than $11
million over 25 years.
School finance director Stan Majewski supported the plan.
“Mr. Majewski commented that we all try to surround
ourselves with people who know more than we do, minutes of the
meeting say. “He believes Arthurs Lestrange is the best public
financing department of any organization in this country.
None of the board members asked Bear or Majewski how much
the district would pay for the swaps, the minutes show.
A month later, Lestrange, working with a Lancaster,
Pennsylvania, firm called Access Financial Markets, negotiated
two swaps with JPMorgan and Morgan Stanley without competitive
bidding.
$3 Million Fees
So far, the district has taken in about $900,000 from the
deals, Bloomberg data show. That compares with $3 million in
transaction fees. Lestrange and Access made $630,000 each for
arranging the swaps, according to school district records. New
York-based Morgan Stanley made $840,000 and JPMorgan received
fees totaling $900,000, Bloomberg data show.
Lestrange and Access earned a fee 10 times more than the
Easton Area School District, Bethlehems neighbor, paid its
adviser on a comparable interest-rate swap in 2004. In a memo to
school board members, Majewski said the fees included annual
interest rate monitoring that would cost the district hundreds
of thousands of dollars.
Bear of Lestrange and Matthew Kirk of Access didnt respond
to requests for comment.
The rates the banks charged Bethlehem were twice the
average for comparable swaps deals. In this kind of swap, in
which both sides pay floating interest rates, a bank calculates
its fees by subtracting an amount from the rate it will pay.
In the average deal of this type, banks lower the rate by
0.06 percent, says Jeff Pearsall, a managing director of
Philadelphia-based Public Financial Management, the largest
municipal adviser in the U.S.
JPMorgan subtracted 0.13 percent in the Bethlehem deal, and
Morgan Stanley lowered its rate by 0.11 percent. Morgan Stanley
spokeswoman Jennifer Sala declined to comment.
`Whats Going On?
“Its obscene, says Peter Shapiro, managing director of
South Orange, New Jersey-based adviser Swap Financial Group, who
doesnt advise Pennsylvania school districts. “What is going on
in Pennsylvania?
Bethlehem has paid Lestrange $1.6 million and Access $1.3
million for their work on eight of the districts 12 swaps,
public records and Bloomberg data show. JPMorgan and Morgan
Stanley made a total of $5 million on those transactions.
Board member Joseph Craig, who approved the deals, says
hes not qualified to discuss the deals and doesnt know how
much they cost.
“I really dont remember a whole lot of specifics about
it, says Craig, 64, a retired special education teacher whos
been on the board for 10 years.
School district business manager Majewski declined to
answer questions about swaps and fees.
“Theyve worked very successfully for me, he says.
“Everything Ive done is done publicly with my local
taxpayers.
Never Told Fees
The school district didnt know that it had overpaid the
banks by about $870,000 because the banks and Lestrange never
told them what the fees were, according to minutes of school
board meetings.
Sometimes school districts have agreed to swaptions even
when a local financial official warns against no-bid deals. In
Butler County, a rural area dotted with working farms 40 miles
north of Pittsburgh, County Controller Jack McMillin says the
lack of competitive bidding for public finance has cost
taxpayers.
“Its a form of institutionalized larceny under the guise
of getting taxpayers a good deal, McMillin says. He wasnt
involved in the school board decisions.
The board relied on an old friend, with the kind of
connections that go far in western Pennsylvania: football and
politics. The district put its trust in municipal finance firm
Russell Rea Zappala %26amp; Gomulka Holdings Inc., known as RRZ.
Hall of Fame
Greg Zappala, head of JPMorgans office in Cranberry
Township just north of Pittsburgh, is the son of former
Pennsylvania Supreme Court Chief Justice Stephen Zappala and the
brother of Allegheny County District Attorney Stephen Zappala
Jr. Greg Zappala, 46, played football for the University of
Miami Hurricanes in the early 1980s.
He was a roommate of Jim Kelly, a Pittsburgh-born, Hall of
Fame quarterback who led the Buffalo Bills to four Super Bowls.
Zappalas uncle, Charles Zappala, was an RRZ executive.
In 1990, Greg Zappala became a broker with the firm. One of
the founders was Andy Russell, formerly of the Pittsburgh
Steelers.
In 2003, JPMorgan bought the firms municipal unit: RRZ
Public Markets Inc., which Zappala ran. The company had worked
for the Butler Area School District since 1991. There was no
competition when the former RRZ bankers paid $730,000 for an
option to refinance, five years in the future, $39 million of
bonds sold by the school district in 1998.
`No Secrets
Russ Greer, 61, who served on the Butler school board at
the time of the deal, says it provided much-needed cash and was
approved at an open meeting.
“There were no secrets, he says.
Except one. Since the school district didnt know what
JPMorgan made on the transaction, it didnt realize it had
become another Pennsylvania municipality that was underpaid up
front on a swaption deal.
“The school district has no knowledge of the specific fees
made by JPMorgan, Superintendent Edward Fink said in a written
response to questions.
The contract had a market value more than three times what
the district was paid, Bloomberg data show. JPMorgan decided how
much of the $2.2 million it would give the district, without
ever telling the school board.
The bank paid $165,813 to bond insurer FSA, $40,000 to
IMAGE, $147,500 to five law firms and $23,000 to the Butler
County General Authority. JPMorgan kept the remaining $1.1
million as its own revenue.
The Boards Understanding
Controller McMillin, a Republican, says he doubts whether
the elected school board had the skills needed to know whether
it was getting enough for the option.
“I cant imagine how they could have understood that, he
says.
Penelope Kingman, a former member of the school board,
voted against the derivatives deal in 2003. She felt her
colleagues had failed to grasp the risk they were taking in
exchange for the money offered by JPMorgan.
“The financial guys would come in with a lot of stuff that
nobody at the district understood, she says. “Local
governments are entering into these without fully understanding
what they are doing.
JPMorgan spokesman Marchiony says, “the swaps used by Erie
and Butler, which were vetted by independent financial advisers
and voted on in publicly attended meetings, enabled both
districts to realize immediate debt service savings, while
protecting them against unpredictable interest rate risk over
several years.
`Beyond Angry
Swap deals in Pennsylvania work out well for banks,
advisers and lawyers who are paid for putting them together.
Schools, parents and students see it differently.
In Erie, Rosena Wright says shes growing angry as her son,
Desmond, 13, has been transferred from Roosevelt Middle School,
which the city shut down in 2007 after the heating failed, the
roof leaked and a ceiling tile fell on a students head. Desmond
is now in a temporary space the school district is leasing from
a church. Wright, 44, a day-care worker, says no one told her
about the deal that cost her schools $2 million.
“Im beyond angry, she says. “I really want to tar and
feather somebody.
Erie schools superintendent Barker says he had thought the
2003 derivatives deal would save some money for the district.
“Were always at the mercy of the experts that advise
us, he says, adding that schools have to find a better way to
raise money. One option would be to return to old-fashioned,
publicly bid bond sales. He says he doesnt begrudge the banks
or advisers their right to get paid.
“We expect people to make a profit, Barker says. “But
they dont have to put their interests over the kids.
To contact the reporters on this story:
Martin Z. Braun in New York at
February 8th, 2008 at 10:39 am
The responsible course of action is to do your probing perfectly.