Stimulating Wall Street

The “Clear Winner” Of The “Build America Bonds” Provision In The Stimulus “Has Been Wall Street”

SEN. CHUCK GRASSLEY (R-IA): “Taxpayers deserve to know where the money is going. Banks are in business to make money. They lobbied for this program. Democratic congressional leaders designed the program knowing that banks would get this business, so those leaders have an obligation to put some checks and balances into the deal. It’s too late after the money’s been spent.”

“But Build America Bonds, Part Of President Obama’s Economic Stimulus Plan, Are Also Building Something Else: Controversy.” (“Stimulus Bond Program Has Unforeseen Costs,” The New York Times, 6/16/10)

•    “For One, Wall Street Banks Are Charging Larger Commissions For Selling Build America Bonds Than They Do For Normal Municipal Bonds, Increasing The Costs To The States And Cities. For another, the new bonds may be priced too cheaply, enabling quick-footed investors to turn a fast profit as the prices climb, but raising interest costs for taxpayers.” (“Stimulus Bond Program Has Unforeseen Costs,” The New York Times, 6/16/10)

•    “Those Imbalances Have Caught The Eye Of The Internal Revenue Service, Which Is Asking Municipalities Whether The Bonds Are Being Priced And Sold Correctly. Alarmed by the uncertainty, Florida, which has sold more than $1.6 billion of Build America Bonds, has retreated from the market.” (“Stimulus Bond Program Has Unforeseen Costs,” The New York Times, 6/16/10)

•    “As If All This Were Not Enough, Wall Street Banks — Which Have Pocketed Hundreds Of Millions Of Dollars In Fees From The Program — Are Now Releasing Research Reports Warning That States’ Financial Woes May Make The Bonds Less Attractive.” (“Stimulus Bond Program Has Unforeseen Costs,” The New York Times, 6/16/10)

•    “Another Clear Winner Has Been Wall Street. Banks Have Collected Nearly $700 Million In Fees For Helping To Issue The Bonds. (That number is low because fees are not reported in a third of the transactions.)” (“Stimulus Bond Program Has Unforeseen Costs,” The New York Times, 6/16/10)

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SENATE REPUBLICAN COMMUNICATIONS CENTER