IT NEVER ENDS: Goldman Sachs, J.P. Morgan & Prudential Steal From The Poor To Earn Subsidies On Luxury Hotels
The recently renovated Blackstone Hotel in Chicago is a shining example of the great taxpayer ripoff in action - all courtesy of your favorite too big to be failures.
Please take a few minutes to read the full investigative piece at Bloomberg. There's much more detail beyond what we're excerpting below.
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Rich Take From Poor as U.S. Subsidy Law Funds Luxury Hotels
The landmark Blackstone Hotel in downtown Chicago, which has hosted 12 U.S. presidents, opened in 2008 after a two-year, $116 million renovation. Inside the Beaux Arts structure, built in 1910, buffed marble staircases greet guests spending up to $699 a night for rooms with views of Lake Michigan.
What’s surprising isn’t the opulent makeover: It’s how the project was financed. The work was subsidized by a federal development program intended to help poor communities.
The biggest beneficiary of taxpayer help for the Blackstone revamp was Prudential Financial Inc., the second-largest U.S. life insurer. The company got $15.6 million in tax credits from the U.S. Department of the Treasury for helping to fund the project, according to Chicago city records, Bloomberg Markets magazine reports in its March issue.
JPMorgan Chase & Co., the second-largest U.S. bank by assets, also took in money by serving as a lender and the monitor of Blackstone construction financing, city records show.
Since 2003, some of the world’s biggest financial companies, including Goldman Sachs Group Inc., U.S. Bancorp, JPMorgan Chase and Prudential, have taken advantage of a federal subsidy that will cost taxpayers $10.1 billion -- and most of the public has never heard of it.
Investors have used the program, called New Markets Tax Credits, to help build more than 300 upscale projects, including hotels, condominiums, office buildings and a car museum, on streets far from poverty, according to Treasury Department records released through a federal Freedom of Information Act request.
Investors have used the program, called New Markets Tax Credits, to help build more than 300 upscale projects, including hotels, condominiums, office buildings and a car museum, on streets far from poverty, according to Treasury Department records released through a federal Freedom of Information Act request.
The Blackstone adjoins Chicago’s cultural hub, one of the most vibrant in the nation, and is miles from the city’s neediest neighborhoods. Prudential invested $9.3 million and made $30.4 million in loans, according to Chicago records.
Under New Markets rules, firms get a credit of 39 cents on the dollar, paid over seven years, for cash or loans they put in. For its contribution, Prudential collected $15.6 million in credits, according to a July 2008 JPMorgan project oversight report filed with Chicago.
Goldman targeted tracts on the upswing in Pittsburgh and Portland, Oregon, when the firm got its first New Markets investment authorizations in 2002. In Pittsburgh, $30.5 million of a $75 million Goldman investment authorization went to a shopping center in the East Liberty neighborhood.
The mall’s tract was in the midst of recovery with city renewal efforts that had already helped lure a Whole Foods Market Inc. grocery store.
Goldman brought in PNC Financial Services Group Inc., the sixth-largest U.S. bank by deposits, to help finance the project. PNC invested $30.5 million in equity and loans to receive $11.9 million in tax credits. The subsidy was $1.3 million more than PNC’s cash investment of $10.6 million.
Banks, lawyers and consultants took fees totaling $9 million -- 28 percent of the total project cost of $32.7 million, according to city records. Goldman’s share, for overseeing the project’s finances, will be $1.6 million over eight years, according to Goldman spokesman Stephen Cohen.
Continue reading at Bloomberg...
Feb 13, 2011 at 3:58 PM
Reader Comments (14)
source for story...
http://www.bloomberg.com/news/2011-02-10/arizona-files-counterclaim-against-u-s-government-in-immigration-lawsuit.html
http://www.activistpost.com/2011/02/us-speaker-vows-massive-budget-cuts.html
http://www.google.com/hostednews/afp/article/ALeqM5hQzZI0qQmvZ4i46BgLHe1AX4RHTg?docId=CNG.7a7f6814a139abb9e87c36c4ef2c1616.181
http://www.bloomberg.com/news/2011-02-09/billionaire-anil-ambani-s-wealth-eroded-as-panic-starts-rout.html
www.cbsnews.com/video/watch/?id=7330817n
The Blackstone Hotel is an interesting case. It was closed down, not by Chicago's ever vigilant building inspectors, but by OSHA. The inspectors may have been otherwise engaged:
http://chicago.everyblock.com/operation-crooked-code/
It took eight years before the doors really reopened. Nobody could keep that money pit going with their own cash.
But the do-gooders and bankers "saved" about 200 jobs at a cost of hundreds of thousands per job.
Just as a guess, I'm thinking the Blackstone owners will putting the arm on the government for a new round of lucrative bailouts in about 15 or 20 years. The Blackstone Hotel has now become Too Big To Fail.
Frank
http://dc.blockshopper.com/news/story/1700116224-Senator_buys_4BD_in_Capitol_Hill
[snip]
Thomas A. Daffron and Susan M. Collins bought a four-bedroom, 3.5-bath home at 30 14th St. N.E. in Capitol Hill North from Nantucket Holdings Ltd. for $705,000 on Jan. 3.
Nantucket Holdings Ltd. paid $235,000 for the property in Aug. 2010. The 1,440-square-foot house was built in 1914 in Capitol Hill Historic District.
http://news.google.com/newspapers?id=D6NJAAAAIBAJ&sjid=Zw0NAAAAIBAJ&pg=4688,2346221&dq=enron+maine&hl=en
it Economic food for poor people .
This is the kind of stuff that just makes me so mad i could scream .But everyone bitches and
the money keeps flowing.
Washington's Blog had a post up the other day talking about the REAL lessons of Egypt. If we (those of us who read sites like the Bail, ie alternative financial media) really want change, we literally have to hit the streets of DC (or maybe Wall St. would be better -- narrow streets which are easy to fill up and shut down). But there must be hundreds of thousands of us at least who read this stuff every day, are pissed off, and want to do something about it. We would have to get off our collective asses, but there are enough of us to cause a serious scene. BUT, we'd have to Protest Like An Egyptian to make it work. In other words, we'd have to promise not to leave until the TBTF's are broken up or real reform enacted. I don't think it's a pipe dream, but it would take some organization to make it happen.
Here's the link. http://www.washingtonsblog.com/2010/11/how-to-save-america-in-one-week.html
Take all your money out of the banks as soon as your paycheck comes in.
Never deposit anything in the banks
Throw all your credit cards to the trash can except for one for emergencies and never finance with the card.
This is easier than the Egyptian Walk.
Doutting? What are you afraid of?
Get everybody around you to do the same and make a pyramid of this.