Wednesday, May 27, 2015

Big Banks Got Their "Mind Right"

Via Bloomberg.
Wall Street is giving the Second City a second chance.
The price of Chicago’s most-actively traded bond has erased almost all of the decline that followed Moody’s Investors Service’s May 12 decision to cut the city to junk. Buyer confidence has been bolstered because banks aren’t demanding penalties related to the downgrade, anticipating Chicago will be able to sell $668 million of general obligations Wednesday to refinance debt.
Wall Street’s support is helping Chicago avert a cash crunch as a $20 billion pension-fund shortfall leaves it with the lowest credit rating of any big U.S. city except Detroit. The loss of its investment-grade rank from Moody’s triggered provisions allowing banks to seek as much as $2.2 billion in accelerated debt payments or fees to break derivative contracts.
Such requirements helped push Jefferson County, Alabama, into bankruptcy when it was unable to refinance debt after the 2008 credit crisis.
Who could force those derivatives payments? Big banks like JP Morgan, Goldman Sachs and BofA.  Who has the DOJ been suing the bejeebus out of these last few years, taking multiple multi-billion dollar settlements out of their hides?   Big banks like JP Morgan, Goldman Sachs and BofA.  Who is playing nice with Chicago, Dear Leader's adopted hometown and the site of his presidential library?  Big banks like JP Morgan, Goldman Sachs and BofA.

Looks like the big banks got their "mind right" ala Cool Hand Luke.


Post a Comment

<< Home