Saturday, May 20, 2006

Nagin's Businessman Solution

To save the city from an abrupt halt to city services, Our Mayor Ray Nagin secured a $150 million line of credit through Chase Bank for the city. This brilliant idea will earn the four banks involved $3.75 million in upfront fees because of a likely interest rate as high as 6%:

Instead of borrowing the money at 4 percent, as is typical for a municipal deal of this size, the city likely will pay interest of around 6 percent, [Peter] Kessenich [the city’s long-term financial adviser and managing director of Public Financial Management Inc. in Atlanta] said. Again, he said the city can’t obtain a lower rate because its credit rating was downgraded to junk-bond status in the wake of Hurricane Katrina.

The interest rate could have been as high as 7.25 percent, but the banks agreed to lower it in exchange for the higher upfront fees, Kessinich said. The banking executive said the lower interest rate will not come close to offsetting the increase in fees.

Nagin declined to discuss details of the deal when he announced it on Monday...

When asked if he had a signed deal, Nagin said, “They’re working on the final paperwork right now. But this deal is done.”

Thanks, Ray, thanks a lot.

***

Much of the mayoral runoff buzz, worry, conspiracy theories, etc. hinge on race. A student said to me a few weeks ago, 'You know that if Landrieu wins, he’d be the first white mayor in over 20 years?' I said, 'And?' But she didn't have anything else to add and her face said that there was nothing else to add. The buzz is that if it weren't New Orleans East and the Ninth Ward that were devastated and still largely empty, as opposed to Lakeview and Uptown, Nagin would be re-elected b/c he is black. That's it. Voting solely on race. The last white mayor N.O. had was Moon Landrieu, a man who consistently opposed segregation. Our black mayors, like our largely black School Board, have presided over the city's long decline with the predictable rise in corruption and minor fortunes made overnight. Is it their fault? Were they on duty during those times? Was it their friends and families who became richer and richer? All yes and no questions. Not all people, white or black or green, are corrupt. And not all are honest. Character does not reside in melanin.


I am repulsed by the focus on race, by the growing buzz or fear that local whites feel it is Their Time To Take The City Back From Those Black People. But what all who follow that line of thought ignore is that this is a Chocolate City, that the bulk of the population yet to return is black, is involved in and the roots of the culture and music and history that makes the city what it is and that made up a huge chunk of the middle class. A Huge Chunk. Not the white folks. Who are deluded about what they are taking back and what the city needs to recover. It is not melanin that is the primary local problem. It is the economy. It is STILL the economy. I don’t care if Burger King and the hotels are now paying $8-10 an hour--rent for a one-bedroom apartment on an iffy block has skyrocketed to $1000 or more a month. Entergy will raise rates b/c of its bankruptcy and all the repairs still to be done citywide. $10/hour is not enough. It is no improvement. It is no economy.

And I haven’t even gotten to the almost non-existent health care system......



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