Self liquidating debt
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- Why do many bankers hesitate when you ask them to be a fiduciary for your Self-Liquidating Loan?
This is called the "FALL-OUT." All of the above actions take place SIMULTANEOUSLY at the closing of the loan, which is arranged by the "collateral house" for the primary broker who put the deal together. After all, all you are asking them to do is disburse the funds against your orders.This page Self-Liquidating Arbitrage Loans (Source: Andrew Scully) You don't have to be rich to get an Arbitrage Loan. Needless to say, you have probably seen hundreds of offers over the past ten to twenty years - but have you been able to get a Self-Liquidating Loan? Because there's many con artists associated with this investment technique. You can get a loan and make money through some arbitrage and hedging. Its a loan where you profit from the spread between interest rates.That’s called “self-liquidating debt,” and Harrisburg’s got a lot of it.Nearly all of the hundreds of millions borrowed to try to rehabilitate the city’s waste incinerator was certified with the state as self-liquidating.But there are laws intended to prevent what occurred.
And the forensic audit of the Harrisburg incinerator retrofit project claims those laws were not complied with.
The audit raises the possibility that there might have been a darker side to all those good intentions.
Former Harrisburg receiver David Unkovic referenced the audit when he recently wrote, “The disdain for the law is so embedded in Harrisburg’s political culture that it constitutes a very insidious form of corruption.” Several attorneys who have reviewed the audit say there could be criminal implications. The audit alleges numerous laws were subverted, but one more than any other should have stopped what happened.
The Local Government Unit Debt Act, better known simply as “The Debt Act,” puts a limit on how much a city or county can borrow based on its tax base. If a city can convince the Pennsylvania Department of Community and Economic Development that a project for which it’s borrowing money will pay for itself, the new debt doesn’t count against that limit.
Take a parking garage, for example: The fees generated each year from parking could reasonably be expected to cover the yearly payments on the loans taken out to build the garage in the first place.
This is absolutely legal under international banking rules.