A new American Mafia is undermining municipal finance and infrastructure

I highly recommend you watch this interview from Bill Moyers & Company, in which Yves Smith and Matt Taibbi discuss a modern American mafia at work in US cities.

Both Smith and Taibbi argue that Wall Street is now operating as an organized crime syndicate in towns, counties, and cities across the US. Their discussion with Moyers’ considers the sociopathic conduct of the finance industry and the corrupt politicians and regulators that serve it. It is chilling.

The implications of this generally unacknowledged urban crime wave and a related politics of austerity are grim, says Smith, and aren’t being discussed honestly. “We’re talking about old people dying faster. We’re talking about children being homeless and not getting education… And they’re not even part of the discourse,” says Smith.

Matt Taibbi has written a new article about Wall Street’s use of Mafia-style bid-rigging scams to steal from US cities and towns. Taibbi describes 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.

Hundreds of millions of dollars were levied in fines against bankers as US cities and towns are ripped off to the tune of billions of dollars. Citing just one case, Taibbi said Jefferson County will be “bankrupt for a generation” because of a sewage infrastructure scam involving JP Morgan Chase.

Transit authorities, too, have been ripped off by Wall Street, as pointed out by Smith in the Moyers’ interview.

Investments are urgently needed in mass transit to compensate for generations of overbuilding motor vehicle infrastructure and pumping greenhouse gas pollution into our atmosphere. But toxic credt swaps and corruption in long-term municipal bonds have devestated transit authorities, as summarized by Theresa Riley in a post about the Moyers interview.

Our efforts at averting the worst effects of climate change and diminishing urban inequality are dangerously burdened by this criminal syndicate. Smith and Taibbi are doing a great service by raising awareness of these criminal practices.

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2 thoughts on “A new American Mafia is undermining municipal finance and infrastructure

  1. Pingback: Who’s to blame for the largest municipal bankruptcy in the US? « Steady City

  2. Pingback: Let’s try affirmative action for cooperatives — instead of for fossil fuel businesses « Steady City

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