http://www.bloomberg.com/apps/news?pid=20601109&sid=a5mSw6gETimU
Just another one of the many perks of "The good ole boy's club" that the taxpayer gets to foot the extra bill for.
Chicago Mayor Richard M. Daley hired JPMorgan Chase & Co. investment banker Gene Saffold and gave him a simple order: protect the taxpayer.
“During these tough times, when people are hurting, this is more important than ever,” Daley said in introducing the city’s new chief financial officer in March 2009. “We must be creative and bold in our thinking as we better manage government.”
Not much has changed. Saffold is sticking with the city’s more than two-decade tradition of shunning open bidding for Chicago’s long-term debt, selling $2 billion in bonds through private negotiations with banks. Arranging competitive auctions instead would save taxpayers millions of dollars, according to internal documents and a review of bond sales by the country’s third-largest municipality.
Efforts to introduce competition fail because the city and its aldermen want to reward those who support public officials and politically connected charities, said a former investment banker in Chicago.
“Firms get chosen to be negotiated underwriters as payback,” said J.B. Kurish, now an associate dean at Emory University’s business school in Atlanta.
The city, which requires public bids for any other purchase of more than $100,000, faces the worst financial crisis of Daley’s 21-year tenure. He closed a $520 million deficit in the current budget by tapping a reserve fund from a 75-year lease of parking meters, putting workers on unpaid furlough days and eliminating funding for civic traditions such as Venetian Night, a lakefront festival Daley’s father started as mayor more than 50 years ago.
