First Detroit, Now Chi-town
Events like this get my mind to running and debating whether power like this should be in the hands of many or in the hands of the few. Recently according to Yahoo finance the city of Chicago has been ordered to pay back $2.2 billion back to the bank after one financial service (Moody’s Investors Service) dropped their credit rating to “junk”. In fact it was ranked to Ba1 which is one step below investment grade.
Apparently somewhere in the contracts that the city of Chicago signed there was a contingency that stated if the city falls below a certain investment grade it would allow banks to demand repayment of the outstanding debt owed. Not only will they be forced to pay back outstanding loans but they are expected to possibly have to pay ridiculous bank fee’s! The three main banks in this deal are JPMorgan Chase & Co., Barclays Plc, and Wells Fargo & Co.
The city of Chicago is far from being considered a wealthy place to live. The negative effect this will have on the city will be beyond dramatic. Most of the people in the community are already living in poverty and struggling to get by, with this bill being called in to be paid it will cause the city’s poverty rate to drop even more. Amazingly the city shows potential to be able to repay the debt, they have $383 million in bonds scheduled to be sold and $900 million of debt looking to be refinanced.
This lawsuit has not yet been set as