Because that's what you do when you're an inveterate gambler, you ask the guys who run the casino to ban you from the casino.
“This is taxpayer money and it’s compromised... You’re playing roulette or you’re gambling with this money and it might work out for some areas, but for a heck of a lot of others it did not.”
The quote appears in today's edition of Bond Buyer and are the words of State Sen. Lisa Boscola. She uttered them as explanation for why she plans to introduce legislation that would ban school districts and localities from using financial swaps and derivatives (fancy words that dress up a transaction that is nothing more than a bet).
Hopefully Sen. Boscola gets the law passed. Folks should never enter into a financial transaction without understanding what exactly is going on. Because when you don't have a clue what you're buying, more often than not you're being taken. And that's precisely happened to PA's school districts when they entered into these types of transactions.
Bond Buyer notes that on one deal the Bethlehem school district ended up costing $10.2 million more than what the same transaction would have cost had the school district just gone with standard fixed-rate loan.
When I originally came across this issue, I suspected that the complexity of the issue plus the fact that the various fees generated by these transactions are often paid to political cronies would ensure that Harrisburg would never consider legislation outlawing the practice.
It's good to see that my raging cynicism get proved wrong.