As Houston Auctions Fail, JPMorgan Exploits Taxpayers
By Darrell Preston
March 6 (Bloomberg) -- The collapse of the auction-rate bond market may cost borrowers from New York to California at least $1 billion in fees, enriching JPMorgan Chase & Co., Goldman Sachs Group Inc. and the rest of Wall Street that let the market fall apart.
The firms that pulled their support of the market where states, counties, hospitals and universities raised $166 billion are offering to convert the securities for a price...
When the market is working, they make money; when it fails, they make money.
"Investment banks created the securities,'' said Peter Morici, professor at the University of Maryland School of Business in College Park. "Now that the market has exploded they're going to force losses on their clients.''
Hard to know what to say about that. I guess the best way to make money is to pretend you already have money.
Comments
No, the very best™ way to make money is to set the rules by which the game is played.
Posted by: stumpy | March 7, 2008 5:25 PM
What? How can anybody "let" a market fall apart? The whole point of auction-rate bonds is that they pay low rates when money is plentiful, which purchasers are only willing to accept because of the potential higher rates in times when money is scarce. The bond issuers who set the maximum rate at a ruinously high level have only themselves to blame: promising to pay 20% annualized was their own stupid exuberance.
Posted by: Daniel Newby | March 7, 2008 9:10 PM