Bid-rigging on auctions for Guaranteed Investment Contracts or "GIC's" are another class of protection for financial interests, according to a comprehensive article by Martin Z. Braun and William Selway, "Conspiracy of Banks Rigging States Came With Crash (Update 1)" (Bloomberg.com, Tuesday, May 18, 2010). This article is nicely condensed in a newspaper blog post by Robert Trigaux on Wednesday, May 19, 2010 on "Ventures" Blog in the St. Petersburg Times.
Reportedly, Bloomberg has unearthed a "conspiracy" of "kickbacks" "in which financial advisers to municipalities colluded with" banks and traders to guarantee that the banks and traders paying kickbacks would land contracts to manage the income raised by the auction of Taxpayers' Guaranteed Investment Contracts. Bloomberg reports that its investigation was massive:
The workings of the conspiracy -- which stretched from California to Pennsylvania and included more than 200 deals involving about 160 state agencies, local governments and non-profits -- can be pieced together from the Justice Department's indictment of CDR [CDR Financial Products, Inc.], civil lawsuits by governments around the country, e-mails obtained by Bloomberg News and interviews with current and former bankers and public officials.
Martin Z. Braun and William Selway, Bloomberg.com, supra.
This gives a new twist to the meaning of "Bond Insurance".
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