Senate Committee Looks at Banning Financial Interest Rate
"Swaps" for Local Governments
September 10 , 2013
HARRISBURG- The Senate Local Government Committee held a hearing at
the state Capitol in Harrisburg today on two bills (SB 903 and 904) Senator
Teplitz is co-sponsoring that would forbid municipal governments and school
districts in Pennsylvania from engaging in interest rate "swaps"
using taxpayer money. Under these
"swap" transactions, a municipality or school district would issue a
bond to a bank or financial institution under a variable interest rate, hoping
to get a better return on their investment.
Sometimes they get a better return, but sometimes they do not: representatives of the Central Dauphin School
District near Harrisburg told the Committee that they've made more than 5-and-a-half
million dollars through "swaps" transactions, while Bethelehem School
District representatives testified that they had lost more than 10 million
dollars in "swaps" deals.
of those testifying on behalf of municipalities and school districts suggested
regulating "swaps" transactions rather than banning them. But Senator Teplitz says anyone working with
taxpayer money should not submit it to the possibility of risk and continued to
call for a ban on "Swaps" for local government bodies.