The State of Illinois and Other Swap Gorillas

A. Rashad Abdel-khalik

Chapter 8 in Brazen:Big Banks, Swap Mania and the Fallout, 2019, pp 163-170 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Many state governments have entered into interest-rate-swap-contracts and suffered huge losses. The sates of Texas, Illinois, New Jersey, New York and Massachusetts have the largest portfolios of derivatives among all 50 states. This chapter provides an elaboration of the case of the State of Illinois. The next two chapters present the cases of New York and New Jersey. However, because of space limitations, I provide a limited exposé of derivatives in the sates of Texas and Massachusetts in Appendixes 10 and 11 at the end of this book. Adding the information in Appendix 8 to the information for the State of Illinois completes the picture suggesting that the officials in these three states appear to be trying to mimic the operations of hedge funds…

Keywords: Swaps; Interest Rate Swap; Unconscionable Contracting; Termination Penalties; Embedded Costs; Paying for Nothing; Gambling; ISDA; Master Agreement; Deceit; Inadequate Disclosure; Hidden Costs; Zero Sum Game; Wealth Transfer; Paper Chasing Paper; Floating Rate; Synthetic Rate; Credit Risk; Demonstrations; Water Shut Off; Union Class Action Suit; The LIBOR Scandal; Non-Profit (search for similar items in EconPapers)
JEL-codes: E43 E44 (search for similar items in EconPapers)
Date: 2019
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