Trib: Toxic Swaps to Cost Schools $126.5 million

[Sherman A1]

Fresh from the world of high-stakes trading, David Vitale arrived at Chicago Public Schools a decade ago with a plan to transform the way it borrowed money.

With the district thirsty for cheap cash, plain old municipal bonds weren't good enough anymore, and banks were standing by with attractive new options.

So Vitale, then chief administrative officer at CPS, and other officials pushed forward with an extraordinary gamble. From 2003 through 2007, the district issued $1 billion worth of auction-rate securities, nearly all of it paired with complex derivative contracts called interest-rate swaps, in a bid to lower borrowing costs.

No other school district in the country came close to CPS in relying so heavily on this exotic financial product. In fact, market data show the district issued more auction-rate bonds than most cities, more than the state of California.


http://www.ctunet.com/blog/tribune-toxic-swaps-cost-schools-126-5-million

[Snarkoleptic]

1. Wealthy, influential banksters are hollowing out the commons and making a mint in doing so.

Plutocrats like Rahm Emmanuel and David Vitale are in the incestuous, country club "you be on my board and I'll be on your board" set. It's a great big circle jerk and we proles end up picking up the tab.

Looking at his profile, it's tough to spot anything that would remotely qualify him to be President of Chicago Board of Education. Such positions should be held by public servants who have experience in school administration. Alas, this is part of the commoditization/monitization of the commons in order to benefit the few.


Sorry for the dense text, but scanning it briefly will show he's just another bankster.
http://investing.businessweek.com/research/stocks/people/person.asp?personId=170446&ticker=UAL&previousCapId=9648131&previousTitle=HUBWOO

Mr. David J. Vitale serves as the President of Chicago Board of Education. Mr. Vitale served as President and Chief Executive Officer of the MidAmerica Commodity Exchange, an affiliate of the CBOT. He served as the Chief Administrative Officer of the Chicago Public Schools from 2003 to 2008 and was a Senior Adviser to the Chicago Board of Education since February 2003, where he oversaw all of the educational support departments, including finance, budget, operations, human resources, technology, security and procurement. Previously, Mr. Vitale served as the President and Chief Executive Officer at the Chicago Board of Trade from February 2001 to November 2002. He was a Private Investor from November 2002 to April 2003. He joined First Chicago Corporation in 1968 and served as Vice President and Treasurer since 1974. He managed foreign exchange and money market activities of the Bank’s London branch in 1979. At First Chicago Corporation, he was Head of the Corporate and Institutional Bank since 1991. He served as Executive Vice President of First Chicago Corp., from 1986 to 1993 and as a retired Executive from 1999 to 2001. Mr. Vitale served as an Interim Executive Chairman and Advisor to the Board at The ShoreBank Corporation. He serves as the Chairman of Urban Partnership Bank. He has been the Chairman of Duff & Phelps Utility & Corporate Bond Trust Inc. since 2009. He has been the Chairman at Duff & Phelps Global Utility Income Fund Inc. since 2011. He serves as the Chairman of Duff & Phelps Diversified Income Fund Inc. He has been the Chairman of DTF Tax-free Income Inc., since May 2009. Mr. Vitale has been the Chairman of DNP Select Income Fund Inc. since May 2009 and also has been its Independent Director since April 2000. Mr. Vitale served as the Chairman of American National Bank and Trust Company of Chicago. He served as the Chairman of ShoreBank. He served as the Chairman of ISO New England Inc. from October 1, 2010 to October 1, 2013 and served as its Vice Chairman until October 1, 2010. He served as Vice Chairman and Director of Bank One Corporation, where he was responsible for Bank One’s Commercial Banking, Real Estate, Private Banking, Investment Management and Corporate Investments businesses. He served as Vice Chairman of First Chicago Corporation and The First National Bank of Chicago from November 1993 to 1998. He served as Vice Chairman of First Chicago NBD Corporation from December 1995 to 1998. He serves on the Boards of Directors of United Airlines, Wheels Inc., and DNP Select Income Fund (Chairman). He serves as a Director of Ariel investments, LLC. He has been an Independent Director of Duff & Phelps Utility & Corporate Bond Trust Inc. since May 18, 2005 and United Continental Holdings, Inc. since February 1, 2006. He serves as a Member of Advisory Board at Crescent Systems, Inc. He has been a Director of Duff & Phelps Global Utility Income Fund Inc. since May 2011. Mr. Vitale serves as a Trustee of Illinois Institute of Technology. Mr. Vitale serves as a Director of Student Loan Marketing Association, and Leadership Greater Chicago, as a Trustee of the Glenwood School for Boys, Trustee of the Museum of Science and Industry, Trustee and Treasurer of the Board of The Art Institute of Chicago, Member of the Board of Managers of the Y.M.C.A. of Metropolitan Chicago, and a Director at Ark Investment Management Wheels Inc. He also serves on a number of civic and charitable boards. He served as an Independent Director of Alion Science and Technology Corp. from September 2009 to August 18, 2014. He served as Director of ISO New England Inc. from 2004 to October 1, 2013. He served as Director of First Chicago Corp since 1992. He served as the President of The First National Bank of Chicago from December 1995 to 1998. He served as Director of The First National Bank of Chicago since 1992. He was a Member of the CBOT’s Board of Directors. Mr. Vitale is a graduate of Harvard University and holds an M.B.A. from The University of Chicago.

[lunasun]

2. + 1. Exactly !