Wikinvest Wire

Duped by Wall Street professionals

Monday, October 26, 2009

Boy, we sure have come a long way in this country when even someone with a good Italian name like Salvatore Calvanese gets taken for a ride by the financial "pros". Details are in this fascinating Bloomberg report about how nearly the entire public sector investor community was duped a few years ago by Wall Street.

Salvatore Calvanese, the treasurer of Springfield, Massachusetts, for four years, had a ready defense for why he risked $14 million of taxpayer money on collateralized-debt obligations laden with subprime mortgages in 2007.

He didn’t know what he was buying, he says, and trusted the financial professionals who sold them and told him they were safe.

“I thought they were money markets that were just paying more,” Calvanese said in an interview. “Nobody ever used the term ‘CDO,’ and I am not sure I would have known what that was anyway.”

Such financial mistakes, often enabled by public officials’ lack of disclosure and accountability for almost 90 percent of government financings in the $2.8 trillion municipal bond market, are costing U.S. taxpayers as much as $6 billion a year, according to data compiled by Bloomberg in more than a dozen states.
The whole thing is worth a look and, naturally, it mentions the state of New Jersey continuing to pay Goldman Sachs somewhere around $1 million a year for interest rate "insurance" on bonds that it no longer owns.

Right now, I'm just a bit embarrassed about being Italian.


Anonymous said...

Don't be embarrassed about being Italian.

I AM embarrassed about being a mullatto though.

John S said...

Soon NJ's new Republican governor can refuse to make those payments to Goldman Sachs and publicly dare them to do something about it.

staghounds said...

"I'm incompetent" isn't the very best defence.

He should have stuck with the traditional "Who wants to know?"

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