The monster banks get monster tax cuts … then turn around and hike interest rates for states and cities. The hikes could translate into millions of dollars of extra costs for cash-strapped municipalities.
Creating Public Banks would cut these middlemen — along with the enormous soaring drain of interest payments and fees — out of public budgets.
“It takes away from money that would help the state’s reserve, or it takes away from money the state may appropriate for other statewide public purposes,” said David Erdman, the capital finance director for Wisconsin, whose payments on a $279 million loan will jump by about $750,000 next year.
“Tennessee will pay an extra $300,000 a year on a $70 million credit line with Wells Fargo and U.S. Bancorp, said Sandra Thompson, director of the state comptroller’s Office of State and Local Finance. The increase is significant “considering it wasn’t a cost that we incurred before Jan. 1 of this year," she said.
Wells Fargo has informed its clients the rate increase is automatic, but borrowers can try to negotiate new terms.