Is more of this to come?

the Erie board paid $2.9 million to JPMorgan to get out of the deal, which officials now say they didn't understand.

WTF if they really are this stupid they deserve to lose the money.
Please Please someone tell me when responsibility begins or is everything someone else's fault?
if anyone should be sued it is the members of the board, for utter stupidity
I know there is also a school district lawyer who reviews all contracts of this nature


what BS
rolleyes.gif
 
Eh. Let dying cities die. Both sides are at fault here. Erie's got to review contracts better, but JP Morgan doesn't need to behave like a predator either.
 
Fond
you posted, "Erie's got to review contracts better, but JP Morgan doesn't need to behave like a predator either."

IF jpmorgan actually failed to disclose all the terms including how their fees woulde be assessed then I agree Morgan acted like a predator
BUT if as I suspect it is all there in black and white screw the stupid school board.

Are you saying that even if it was all spelled out Erie should be allowed to sue and recoup the loss?
 
fond You posted :
]In those cases as well, all the terms are laid out in black and white, but it doesn't make them any less predatory. "

Are you honestly trying to compare an elected school board in a city of over 100k AND a board certified lawyer or lawyers to some elderly people not in full control of their faculties?

that is really weak. Please

these board members and their counsel have a fiduciary responsibility to the tax payers in the district.
do You think this was the only option offered? that no other companies made presentastions
do you thinki the big bad evil people from jp morgan swooped in and bamboozled the entire school board and their attorneys? This wasn't Prof harold Hill marching down the street
This paragraph is from the articlw
"David DiCarlo, an Erie-based JPMorgan Chase banker, told Barker and the school board on Sept. 4, 2003, that all they had to do was sign papers he said would benefit them if interest rates increased in the future:"

Are you trying to say it didn't occur to anyone on the board or their attorney to ask what would happen if the interest rates decreased. TORBUSH
these were educated professional people who had time to review the contract and I feel damned sure it was all in there.
Nope sorry Erie ISD should suck it up and learn a valuable lesson. AND the people of Erie should vote these greedy stupid people out as soon as possible
 
read the whole article. this was an interest rate swap designed to artifically lower the interest rate on outstanding bonds immediately. Both sides had lawyers, and there were no hidden fees and there were discussions about the risk. The District did not bid out the contract and certainly could have even though state law didn't require it. That's what lead to the higher fees at closing, probably the higher termination payment option too (its in the article). There were closing fees and then JPMorgan started paying the District interest. Now, the contract has flipped on the District and the District has decided to cancel the contract and voluntarily pay the termination fee. That's how these work, you get your benefit but if the market flips and you want out, you have to pay through the nose. You can't get one sided interest rate protection from someone who isn't the actual lender without giving something in return. The District did a poor job managing its assets and then cried foul when it lost.

Who is at fault here? The District and no one else.
 
My questions as a member of the Erie School board to Jp Morgan would have been:
What happens if interest goes down?
How do you jp morgan make money?
What is the avg % of your fees to the total value?

Apparently the shcool boards have '"independent advisors" who ONLY make money when a deal is struck, How stupid do you as a board member have to be to not know this? how independent can someone be if the only way they get paid is to make a deal? Geeez louise how do these board members function id dialy life?

In September 2003, the state Legislature adopted a law allowing schools and towns to use interest-rate swaps to lower borrowing costs and raise cash.

Whose responsibility is it to vette deals like this and approve or disapprove?
 
A'sD- the answer to that would be.. not many deals would get closed- if everyone had to read the papers at the table (and I close said housing deals for a living)

That would be an extremely crappy way to do it. What would be better is if all the docs had to be given to buyer and seller say 24 hours ahead of time, they could read them at their leasure and then ask questions (or better yet- get their attorney to review them and explain them to the buyer).

What's funny is that presumably this is what was done by the school board. I cannot imagine these docs weren't read and reviewed and explained by their legal counsel. No way they got "surprised" by this at closing. Apples and oranges me thinks,
 
A'sD You posted:
'I don't disagree, but without having a transcript of the sales pitch by the guy who sold the district I will reserve "

If I am a ONE of the school board members, and or the attorney for the school board how stupid would I be to take everything at face value on a complex million dollar deal that impacts the district for which I have a fiduciary responsibility?
No, sorry the board screwed up big time. It is NOT the responsibility of the lender to make sure everyone read the document, especialLy not a school board and attorneys.

You say you didn't read your entire mortgage doc. but i bet you did read what your interest rate was and I bet you knew whether it was a fixed or variable.
How is this different?
If these people were too stupid to wonder what would happen if interest rates fall that is not the fault of the lender
 
i don't know enough about the practices over the past 5-6 years to comment.
I do know banks and lenders were charged with making loans accessibleto more people, particularly minority and those with less than sterling credit.
I do know that lenders are in the business of making a profitand I think lenders should be able to charge more where their liability is higher.
. I do know there were mortgages given to people who should have never gotten them and there werfe shady loans.
WHAT I don't know is how many shady loans there were versus how many people tried to game the system by buying more house than they really could afford or by taking an ARM thinking the housing boom would go on forever and by the time their rate adjusted they'd either be making more money or they could refinance.

IF there were a way to identify those who were truly scammed or truly did not understand and if those loans could be reissued as fixed I would be all for that.
I am not at all for all the others and I suspect they are the hugely vast majority of people whining.

As far as this case with the Erie school board? wow I am still amazed at how greedy and therefore stupid the board and their attorney were. I do NOT hold the lender in this case responsible. Comparing elected school board members and their attorney with people who might not have understood what a mortgage is or how an ARM works is silly.
 
This appears to me to be a pretty basic financial derivative transaction. These kinds of things happen every single day. Look at the bad hedges the oil industry has had to buy out over the past 2 years. Same thing here. I am sure the bank would have been more than happy to pocket the cash had interest gone the other direction.
 
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