Brazen: Big Banks, Swap Mania And The Fallout

by A Rashad Abdel-Khalik

For nearly two decades, countless non-profits in the U.S. were forced to pay big banks enormous sums of money to settle or terminate bilateral contracts known as Interest Rate Swaps (IRSs). Officials at non-profits had entered into these costly contracts unaware that each contract has only one winner, and that big banks did not intend to be the losers.

The effects of such monetary transfers have been catastrophic. Money-strapped non-profits had to dismiss schoolteachers, shut off water supply to thousands of poor households, and downsize many other essential public services. Local and state governments, public school districts, universities, hospitals and transit authorities from New York to Los Angeles have been among the largest hit.

This book presents selected cases and highlights the lack of evidence that decision makers at non-profits had fully understood the terms and complexities of IRSs. The evident unequal bargaining power thus gives rise to the high likelihood of unconscionable contracting. Additionally, for terminating these contracts, big banks collected huge sums of money for services that had not been, and will never be, rendered. Accordingly, questions arise as to whether these termination payments are tantamount to unjust enrichment.

Contents: Preface What Is This Book All About? Carol Loomis's Four Derivatives' Sins: Lies, Leverage, Ignorance, and Arrogance The Saga of Jefferson County, Alabama, and JPMorgan Chase Big Banks took $960 Million from Detroit for Terminating Swaps and Gave Back Nothing The City of Brotherly Love Drowned in The Eastern Swap Sinkhole The Heart of America and Windy City Handed its Compass to the Banking Cartel Tales of Two Small Cities The State of Illinois and Other Swap Gorillas The State Of New Jersey: The Pandora's Box of Swaps Cost Nearly $1.5 Billion The Empire State Doctored Interest Rate Swap Gains Artfully Jack Wagner's Mission to Rescue Pennsylvania from the $17.4 Billion Derivatives' Mess The School District of Philadelphia Dismissed Staff to Save Money for Swap Payments Two Other Special Cases in the State of Pennsylvania Chicago Public Schools Dismissed Staff and Borrowed at High Rates to Pay for Interest Rate Swaps Denver Public Schools Paid the High Price of An Unwitting Experts' Advice The Flagship of The Tar Heel State kept Dipping into the Same Losing Swap Well The MSU Spartans kept on Swapping their Money for Nothing Interest Rate Swaps Cost Harvard $1.47 Billion The University of Texas: A Large State-Run Hedge-Fund-Like Organization in Austin Indiana University Health: A Case of Derivatives Abuse from the Midwest The University of California Health System: A Case of Derivatives Abuse from the West Johns Hopkins Health System Corporation: A Case of Derivatives Abuse from the East The University of Florida Shands Hospital: A Case of Derivatives Abuse from the South The Sisters of Charity of Leavenworth Health System Dignity Health Holds a Bigger Bag of IOUs to the Banking Cartel Texas Methodist Hospitals did not Escape Big Banks' Vise With Swaps, Riding the Gravy Train is Expensive The New York Metropolitan Transportation Authority fell into the Eastern Swap Sinkhole The Bay Area Toll Authority (BATA) fell into the Western Swap Sinkhole The Massachusetts Bay Transportation Autho

598 pages, Kindle Edition

Published February 15, 2019