Banks Take Advantage of States in Fiscal Crisis  The same large
banks whose unregulated actions were primary contributors to the
economic downturn have also been manipulating state and local
governments to profit from budget deficits for years.
Essentially, banks are alluring states with the promise of a
means to cut borrowing costs and increase returns through the
use of an interest rate swap.  The mechanism is a derivative
that allows cash-strapped municipalities and states to exchange
interest payments on a variable bond deal for an allocation of
funds from a bank.  So, the bank would establish a fixed rate on
the bond and swap for the variable "interest rate of the bond
that was set by larger macroeconomic forces, such as the Federal
Reserve."  Unfortunately, the results have been disastrous.
These type of deals are losing propositions for states and
municipalities.  Under unfavorable marketing conditions,
interest payments and fees associated with these deals can jump
dramatically.  Since the federal g