Firm Acted as Tutor as It Sold Risky Deals to Towns

[groovedaddy]

(A striking illustration of why we've still got a ways to go in cleaning this mess up - gd)

LEWISBURG, Tenn. — Five years ago, this small factory town was struggling to pay the interest on a bond for new sewers. Bob Phillips, Lewisburg’s part-time mayor and full-time pharmacist, was urged by the town’s financial adviser, an investment bank named Morgan Keegan & Company, to engage in a complex financial transaction to lower interest rates.

When a Lewisburg official attended a state-sponsored seminar intended to lay out the transaction’s benefits and risks, he was taught by investment bankers from Morgan Keegan.

And when Lewisburg decided to go ahead with the transaction, who was there to make the deal? Morgan Keegan.

In January, local officials were shocked to discover that annual interest payments on the bond had quadrupled to $1 million. Morgan Keegan, they said, did not serve them well in any of its roles.

http://www.nytimes.com/2009/04/08/us/08bond.html?_r=1&th&emc=th

[Tempest]

1. The town officials are to blame

You'd have to be pretty fucking stupid to use one company from start to finish on a complex financial transaction without getting input from a second or third party.


And the state officials share in the blame for backing Morgan Keegan and giving them free rein.

[kickysnana]

2. Were they touted as a good "Christian" group?

So many politicians were elected because they were "born again", not because they could govern or protect citizens from the wolves.