Some state school districts asking for bail-out after risky investments fail
Five Wisconsin school districts which made $200 million in risky investments could be the next ones to get bailed out by the taxpayers.
The Kenosha teachers' union asked House Republican Paul Ryan and Senate Democrat Russ Feingold for the so-called TARP funding used for bank bailouts. And both lawmakers passed on the request to the U.S. Treasury Department.
Schools in Kenosha, Whitefish Bay, Waukesha, Kimberly and West Allis-West Milwaukee sued two banks after the risky collateral debt obligations they purchased in 2006 plummeted in value.
The schools said they were trying to bolster their retirement funds and the banks misled them.
The banks denied wrongdoing and said they should eat their losses just like the rest of us.
But Joseph Kiriaki of the Kenosha teachers' union said the debt obligations were similar to the ones AIG got off the hook for.
Ryan's office said it was only trying to help a constituent. The congressman said he didn't want to "give the false impression that the federal government will be able to address this matter."
In recent months, the schools and banks have been playing a legal tug-of-war over which court should hear the lawsuit.
The schools want the matter heard in state court. But the banks want to move it federal court where the judges are a lot more familiar with these types of cases.