by Don Washington on 2012/04/23
"… there appear to be no standards of conduct or performance against which to measure the CIT (Chicago Infrastructure Trust) or hold it accountable." – Inspector General of Chicago Joe Ferguson
I am only writing this because you should be calling your alderman about the Infrastructure Bank and telling them to vote no. You can do that by going here and putting a little dangerously informed accountability on their uninformed hindquarters. You see tomorrow our aldermen are not going to make a mistake, which is what they will tell you at some point in the next four or five years, because that’s how long it typically takes a financial bubble to explode.
Mayor Emanuel’s Infrastructure Bank has all the hallmarks of high-powered financial bubble waiting to expand into a public policy Ponzi scheme of hilarious proportions. So remember, this is not a mistake it’s a choice. These people have been warned and warned and they can’t wait to jump right in, with both feet, our tax dollars and welfare of every child that needs a decent school in this city. I have talked a lot about what a bad idea this is and if you scour the site you will find several more articles, enjoy.
At the Tutorial we consume, analyze and argue a lot of public policy. Fortunately we’re a nominally clever and funny lot. You’ve not done a spit take like the one you do when someone connects the Infrastructure Bank to a Klingon raid and Ruffin starting the shooting part of the Civil War in iambic pentameter but it happened. We have five simple measures of good public policy.
One, who benefits from it, does it help the people of Chicago or is it designed to help some other entity first and foremost. Two, is it efficient in that the money doesn’t go to profit and overhead but instead it goes right into the project without any skimming for interests that have obligations other than the public good. Three, is it interactive, meaning the public can influence what happens to it once it gets rolled out. Four, is it economic as in will the bulk of the money flow into and be recycled primarily through the city’s economy or it a large share of it going to be leaving the city to pad the thick pockets of some Wall Street firm? Five, is it effective, meaning it has either worked before or the entities engaged in the policy initiative have a track record being good stewards of the public trust.
Now you do not need to be Einstein or Turing to know that the Infrastructure Bank is 0-5 on the good public policy marker list. It is an extra-legal entity that was created to get around oversight on almost every level one can imagine… on purpose. Mayor Emanuel and his friends want control of this money making venture because that’s what it is first, last and foremost, a new financial product being created and alpha-tested right here in Chicago. Alpha-tests typically being so wildly successful I can only imagine what this one will be like. Maybe now is a good time to stock up on canned goods and ammunition? It's just a thought.
The forces that primarily benefit from this deal are Citibank and Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets, J.P. Morgan Asset Management’s infrastructure investment group and Union Labor Life Insurance Co. (Ullico) and their investors. Otherwise they would not be willing to lend us, you and I, $1.7 to $7.3 billion dollars. The entire scheme is has been conceived of as a way to generate profit for these partners and their shareholders to entice them to give us money. The five member board that the Mayor appoints will come from this community and even if they do not profit directly from the Infrastructure Bank they do profit from creating these kinds of partnerships for themselves and the other members of the FIRE sector (Finance, insurance and real estate) for the future. Once this thing is created from closed non-public meetings to no Aldermanic oversight the public will not get to say boo or even know anything about what is going on with our money in least it.
As bad as all the above is, here are the worst bits, the sorts of things that would give Dracula nightmares because unlike our Mayor, the Lord of Vampires may be in possession of an actual conscience. I say this because it takes someone bereft of a conscience to dream up the Infrastructure Bank the way it it is currently constituted and that someone would be our Mayor. This money is not staying in the city. It will kick-start projects but it will not address the long-term funding problem we face with our infrastructure. The best case scenario is that the Infrastructure Bank will create more infrastructure we can’t stop from crumbling once it's built. Then, all the while it will have the preverse effect of funneling billions of dollars into the pockets of entities, who will use some of that money to insure that we never raise revenue from them to address our funding problem and fix our crumbling infrastructure… brilliant.
Finally, if past behavior is the best predictor of future performance then this Infrastructure Bank is not going to be effective… in that it will deliver the public benefits it promises. I say that because let’s face, it the combined track records of Citibank and Citi Infrastructure Investors, Macquarie Infrastructure and Real Assets, J.P. Morgan Asset Management’s infrastructure investment group and Union Labor Life Insurance Co. (Ullico), in reference to rectitude and trustworthiness is only slightly worse than that of say Satan. I think we can safely say that it is very likely these people have phrases like: “We should build the cost of settlement(s) to avoid criminal liability into our business plans and profit projections.” as part of how they do business.
The thing that rankles me and ought to rankle you the most about this entire process is the simple fact that most of the aldermen who are voting on this tomorrow do not know enough about it to even make a bad decision. For example, when Ald. Rey Colon tells you he understands how this is an excellent financial development tool, ask him if he can explain to you how financing new infrastructure creation will raise the necessary funding to maintain and improve it. Being a double idiot he will not know. One can only imagine how much more informed he will be when he signs off on the Mayor’s five hand-picked financers to join the five financial partners to oversee this little project of his. I don't mean to pick on Rey, he's not along he's just on my mind because I am sitting in his ward right now wondering how he will screw up the Logan Square Farmer's Market out of sheer spite.
It might be too late to stop your alderman from voting in favor of the Infrastructure bank but you should still try. After all, none of us has a vested stake in becoming an example of what not to do. We don’t want Chicago’s Infrastructure Bank idea to become thought of in the same way people cite the Titanic as an example of a disaster of the Cubs as an example of how not to play baseball. So call them and let’s try to stop them. Get off the bench our city’s future hangs in the balance and all of me wishes I was exaggerating but imagine a financial crash in miniature right here in Chicago. See, you can’t even imagine the bottom of where that sort of thing ends can you? Call these people we are running out of time.