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Oakland And The Market Crash - What About Our "Swap Option Bonds"?

When I worked for Elihu Harris as Economic Advisor between 1995 and 1999, Goldman Sachs responded to an RFP issued by our then-treasurer Jan Myzck to issue municipal bonds for Oakland projects.

At the time, Goldman was competing with an organization I favored, the minority firm Pryor McClendon Counts (PMC). Goldman proposed using a kind of "swap-option" bond, where our payments were essentially swapped with those of another party -- a counterparty -- with the idea that we would be under the rate of interest of the other bond when it was lower.

I prefered PMC's more basic proposal because it had less risk attached, but Goldman won the competition and was the sole-source organization with zero minority participation -- a situation I just plain didn't like at all and since Jan was Black, I was really steamed that she handled matters the way she did. PMC had a good -- great =- proposal but she was in Goldman's back pocket.

Elihu hated the outcome of the deal as well. I --- to this day -- don't know what was up there with her.

Fast forward to today and the market crash. I talked to a friend of mine who said that a city that was "involved in a swap might take a look at how they're doing."

Well, it's a good idea, yeah?

Stay tuned.
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