Thursday, November 6, 2008

Europe’s Toxic Debt Imperils Wisconsin School District’s Finances

According to Anne Szustek, the Whitefish Bay School Board is now filing a lawsuit alleging misrepresentation against Royal Bank of Canada and Stifel Nicolaus, the companies that sold them Synthetic CDOs.

David W. Noack, an investment banker who had been giving guidance to school boards in Wisconsin for some 20 years, suggested that the Whitefish Bay school board should buy into a series of European investments that he said could only mean steep returns.

The Whitefish Bay School District and four other local school systems spent $35 million and borrowed an additional $165 million from Irish bank Depfa to buy up synthetic collateralized debt obligations, or synthetic CDOs. Synthetic CDOs are a form of insurance that guarantees corporate bonds. Should a company default on its debt, the synthetic CDO steps in to cover that loss.

The only way it would fail? “There would need to be 15 Enrons,” Noack said. It turns out that $200 million of the districts’ pooled funds were used to back $20 billion in corporate bonds. The synthetic CDOs turned out to have been toxic, and the money the Whitefish Bay School District put up is now going toward covering that debt.

Both companies being sued maintain that the school board signed documents knowing what it was getting into. Click here for full article.


Paul Fraser said...

Att: RBC Bank President Gordon Nixon - Salary - 11.73 Million!!


I'm a commercial fisherman fighting the Royal Bank of Canada (RBC Bank) over a $100,000 loan mistake. I lost my home, fishing vessel and equipment. Help me fight this corporate bully by closing your RBC account.


There is no monthly interest payment date on the contract.
Date of first installment payment (Principal + interest) is approximately 1 year from the signing of my contract.
Demand loan contracts signed by other fishermen around the same time showed a monthly interest payment date on their contract,(agreement).
The lending policy did change at RBC from one payment (principal + interest) per year for fishing loans to principal paid yearly with interest paid monthly. This lending practice was in place when I approached RBC.
Only problem is the loans officer was a replacement who wasn't familiar with these type of loans. She never informed me verbally or in writing about this new criteria.

Phone or e-mail:
RBC President, Gordon Nixon, Toronto (416)974-6415
RBC Vice President, Sales, Anne Lockie, Toronto (416)974-6821
RBC President, Atlantic Provinces, Greg Grice (902)421-8112
RBC Manager, Cape Breton/Eastern Nova Scotia, Jerry Rankin (902)567-8600
RBC Vice President, Atlantic Provinces, Brian Conway (902)491-4302
RBC Vice President, Halifax Region, Tammy Holland (902)421-8112
RBC Senior Manager, Media & Public Relations, Beja Rodeck (416)974-5506
RBC Ombudsman, Wendy Knight, Toronto, Ontario 1-800-769-2542
Ombudsman for Banking Services & Investments, JoAnne Olafson, Toronto, 1-888-451-4519

"Fighting the Royal Bank of Canada (RBC Bank) one customer at a time"

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