Local Commentary

Editorial: Don’t Give the $ To the Banks!

It is becoming more and more clear with each new Falls Church City Council bite at the apple on how to spend what is now over $20 million in the cash component of the City’s sale of its water system to Fairfax County. A healthy resistance is growing to the veritable insistence emanating from staff at City Hall that the bulk of the money be locked up in the City’s retirement fund bank account to generate a modest annual return, only if the economy remains healthy, that is.

To their credit, members of the Council began to delineate at their work session Monday alternatives that could generate a far greater yields while leaving control over the money in their own, and not some bank’s, hands. When you’ve got the cash under your own control, you can react when there are special opportunities, or fire sales, as the case may be, for acquiring property or having opportunities for federal matches to build up infrastructure.

(Such opportunities now exist: the City’s money can be doubled in value by simply being deployed for federally-matched transportation purposes. That’s not the lame seven percent the retirement fund option presents, but a 100 percent yield!)

We cannot know or question the true motives of those pushing so hard for the hands-tying bank option, except that banks – those very lordly institutions that can lure millions into self-destructive borrowing, then have their system blow sky high, only then come back to get bailed out by the government supposedly representing the same people they messed up so cruelly – seem to have a lot of clout and, therefore, suasion.

First of all, going the bank route takes the decision making on the money out of the hands of the City’s elected officials. We know that bankers think they know better than anyone how money should be used, and it always turns out to be in ways that they make a bundle for themselves, as a result. But are these banks willing to guarantee a return to the City if they get to use all our money? No, it was made clear on Monday night there are no such guarantees, at all. (We will note that experts are now predicting with the quantitative easing coming from from the Fed, the markets are bracing for a major “adjustment” of 20 to 25 percent downward in the near future).
The smug “we know best” posture of banks ruined countless lives when the market crashed in 2007, but they haven’t abandoned their arrogance, in the least.

Secondly, to reiterate, there are many better ways, with higher yields, to use the money if it stays in the hands of the City, and not of some bank. Our Council members were elected to look out for their citizens, not to hand some bank a sum of our cash to turn around and make a killing with, while leaving us in a state of anxiety.