Buffalo's Bad Loans

The Buffalo News calls it an “instituional loan fund.” Read the article. Is sounds like “instutional loan fraud” to me.

In order for the downtown development to speed up to the tempo that Buffalo city leaders want it to, they have established, in cooperation with the capitalist banks, a fund (part of the Buffalo Reuse Building Project) to help offset the costs of projects that banks would not themselves cover because they are “too risky.”

The fund is supposed to cover “extra ordinary costs” that projects can not get covered because of funding gaps (more expensive than originally thought) or because the borrowed can not get the money they need “on reasonable rates or terms.”

Translation: The banks think the loans are too risky because the construction (or renovation) project is too risky.

So the City of Buffalo is ponying up money, in collaboration with the banks to provide the money that private capitalist developers need to renovate dilapidated buildings into residential and mixed use housing projects.

The money is being loaned at Libor +1% interest, currently 1.51%. (BTW: I remember the Libor scandal. Do you? Look it up.)

The clincher (and I quote): “Any losses will be absorbed first by the city before the banks take any hits.” Note the bold and the italics.

So the taxpayers of the City of Buffalo will lose their investments before the banksters lose any of theirs. Profits before people. Bourgeoisie socialism at its finest. Yes, this is somehow in the best interests of the people that they lose their tax dollars before the banks lose anything.

Let's face the facts here: If the banks won't underwrite a project because they think it is too risky, why should the taxpayers put up a single cent?

A question that needs to be answered: If the developer defaults, and I suspect more than one will, who gets the property? Does the city or do the banks get it? Or is it split? The article fails to ask that question.

It should have.

After all, it's our money.

We need to make sure that the Buffalo Urban Development Corp doesn't invest our money in crap.