Democrats and CDR Financial Products

Following the Bloomberg story that detailed how widespread the muni-bond scandal actually is there has been a bevy of stories across the country detailing how vast it actually is. From the NY Times to various posts on the topic such as found here or here, or found in the NY Times Dealbook section, to reports on the drop of CDR's stock. As one can see it appears a show may have finnaly droped nationwide as to the vast extent of the alleged wrondoing. Often left out is the political aspect on how this company worked various politicans (overwhelmingly Democrat) to allegedly get the inside track on these deals, lets detail once again the connections:
From January 16th 2009:

The Municipal Bond Scandal that Bloomberg markets exposed in 2006 with their story Broken Promises is emblematic of a culture of corruption that exists in the Democratic party. Using the poor and needy as an excuse, CDR Financial Products along with several other businesses including J.P.Morgan Chase and AIG, teamed up with significant elements of the Democratic party in a nationwide scheme that routinely left parts of this country devastated.


Pay for Play is a misnomer, in reality that is only half the equation. Yes the bribery of Democrat politicians is an offense all by itself. But even more threatening were the black box deals and financial schemes using the municipal bond market as a means to pilfer millions of dollars. The deals were opaque by nature and complicated by design. In short they involve insurance companies, banks, and CDR floating municipal bonds for local government agencies with the purpose of funding improvements, but with the real goal of merely of enriching the companies .

A summary of black box deals:

Step 1:Issuer sells Millions in Municipal Bonds to finance civic improvements
Step2 :Financial firms make millions in fees from bonds Sales (Some have secret agreements to make more from investment gains and insurance)
Step 3: Cities buy back bonds from investors, citizens get nothing.
Step 4: IRS says the agreement cheats taxpayers, demands a tax penalty to keep the bonds tax exempt.

CDR and the Democrats

The withdrawal of Bill Richardson recently made the headlines. In his case CDR gave money to Si SE Puede, a PAC formed to help pay Richardson's expenses at the 2004 Democratic Convention. In exchange its argued that CDR received favorable treatment in regards to bids to do business for GRIP (Govenor Richardson's Investment program) , bid rigging in short.


Another aspect of pay for play, and one more likely to land a politician in jail is CDR's tactic of finding friends, fundraisers and associates of elected Democrats, and hiring them as "Consultants". In New Mexico it was Richardson friend Mike Stratton who was hired by CDR. On a side note the Director of Si Se Puede Fred Duval was hired by UBS ,a Swiss bank, as a consultant. UBS was also one of several banks that ended up receiving a cut of the GRIP pie. The collusion of CDR, elected Democrat, and consultants that occurred in New Mexico is similar to other CDR linked scandals. In Philadelphia it was Ron White (now deceased) who received money and super bowl tickets from the company and was hired as a consultant. He was also an associate and fundraiser for Philly Mayor Sharpe. In Pennsylvania as a whole it was Alan Kessler who was the chief lobbyist for CDR and a top fundraiser for Ed Rendell. The most egregious example would be Mayor Larry Langford of Birmingham Alabama, who is accused in a 101 count indictment of using his friend William Blount and lobbyist Albert LaPierre to funnel money, jewelry, cloths, and watches into his hands in exchange for government favors while he was President of the Jefferson County Commission. Jefferson County, which includes Birmingham is on the precipice of the greatest municipal bankruptcy in history. There are also questions of CDR's actions in Atlanta and several of municipalities and CDR is currently being sued by over 20 school districts and cities in addition to the criminal investigations.


Donations to Democrats
Over the past 16 years David Rubin, President of CDR, has managed to funnel 279,000 dollars to various candidates across the country. In total 95% of that money went to Democrats. Of those Democrats, Obama, Clinton, Ken Salazar, and Henry Waxman were some of the top beneficiaries. In addition he has spread 91,000 dollars to Democrats on a state and local level, with Ed Rendell, Governor of Pennsylvania being the top recipient. It should be noted that Rubin was on Rendell's transition team when he became governor a couple years ago. And where was our former Chairmen for House Oversight and Government Reform Henry Waxman when all of this corruption was going on? Broken Promises exposed CDR in 2006 and the SEC had fined that company in 2007, why no headline grabbing hearings for the country to sick its teeth into? Oh wait CDR in addition to being pouring hundreds of thousands to the Democrats happens to be located in CA-30, that would be Waxman's own district.


The Impact
The greatest threat would be to the integrity to the 2.6 trillion dollar municipal bond market. If "phantom" bonds and scams infect the bond market, what could happen? We have all seen the past couple years the damage fear, panic, and fraud could do to markets and economies. But there is a human impact as well, not just the corrosive affect of bribes and corruption, but an increase of pain and anger for people across the country. In Florida, housing called Oakwood Terrace was left a cesspool when muni-bonds floated in the name of helping low income neighborhoods was never used for improvements. In Philadelphia the people have had their gas rates increased to make up for the 60 million dollars lost from CDR deals gone sour. And in the greatest disaster of all, Jefferson County Alabama, (Mayor Langsford's jurisdiction) is now on the cusp of complete financial meltdown.


If this is not a culture of corruption, what is?

Lets see, Ken Salazar is now at Interior, Obama is President, Clinton is at State, Rendell is still the Governor of Pennsylvania, and Henry Waxman happens to be sitting in a powerfull chairmenship going after companies who point out the reality of Obamacare.
Convergence Indeed!