We Demand A Do-Over

Author:
Publish date:
Updated on

Hey, you know that fully negotiated deal we signed back in the 1990s? Well, we just loss our ass and, see, we don't like that, so, we want a do over? What? Fair? Negotiated? Screw that. We'll sue!

The investments date back to the 1990s, when Italian cities were keen to borrow money. Central government rules required local authorities to put a portion of their borrowings into "sinking funds" to help repay the loans, the newspaper reported.
These funds were invested initially in Italian government bonds and then more widely in other government debt with the European Union.
The sinking funds were managed by investment banks with the intention of returning a profit for the local authorities, but some of the management contracts contained clauses which meant the value of the total loan could be at risk, the newspaper said.
In particular, some deals allowed banks to invest all the money the local authorities borrowed, then pay a return on the portion of the money in the sinking fund and keep the rest of the profits, the newspaper said.
This meant that if things went badly, the local authority would be liable for the total loss and would also have to pay off its original loan when it came due, the Telegraph added.
Milan is considering legal action against a group of lenders

Banks reportedly face action over Italy bond scandal [Marketwatch]

Related