Build America Bonds May Be Bad Deal for Cities

Build America Bonds, part of the economic stimulus package that are intended to help cash-strapped cities building roads and schools, have been found to cost cities and taxpayers more over the long-term.

They're supposed to have a more favorable interest rate, with the federal government paying 35% of the interest costs.

"But questions about this multibillion-dollar program are piling up.

For one, Wall Street banks are charging larger commissions for selling Build America Bonds than they do for normal municipal bonds, increasing the costs to the states and cities. For another, the new bonds may be priced too cheaply, enabling quick-footed investors to turn a fast profit as the prices climb, but raising interest costs for taxpayers. "

Full Story: Stimulus Bond Program Has Unforeseen Costs


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