
Here's how it works. School districts receive funding in a variety of ways: from annual state payments to bond proceeds. So large districts often have substantial sums of cash on their books that is better invested than parked. Makes sense, money needs to make money so ground isn't lost to inflation. So a bunch of large funds sprung up to service these needs. You know what's coming, don't you?
Sure enough, many of these funds invested in loan-backed securities including large portfolios of now worthless sub-prime loans. In Florida's case, the state "froze" the investment fund behind fears of a classic "run" on the assets. Fund losses were so large that massive withdrawals by client school districts would have literally broken the bank. Not a pretty picture. To make matters worse, a lot of towns and fire departments also use these funds to invest taxpayer dollars - according to the Bloomberg report. So just because your own personal property may escape foreclosure, don't breathe too easily. You're going to pay for the schemes of greedy bankers in so many ways. We're just beginning to get a grip on how many.
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