Theft at the Public Till
impressive. No longer are tax-free bonds issued by cities and towns here for no reason other than to generate fat fees for a coterie of local lawyers and bankers. No longer are small-town banks propped up by cheap deposits courtesy of the state. And no longer does Louisiana borrow money without professional oversight and without competitive bids from dealers selling its bonds. In a state known for its elastic ethics and political chicanery, these actions have brought Ms. Landrieu praise and enmity. But what is notable for us is her attack on a secret arrangement in which two prominent Wall Street firms, the First Boston Corporation and Lazard Freres & Company, say they had to give about $240,000 - half their fees from a bond deal-to a black-owned bond house that did no work but whose owner had the connections to deliver black votes for then Gov. Edwin W. Edwards. The two Wall Street firms gave First Commonwealth Securities a local black- owned firm about $240,000 - 50 percent of the fees they earned from selling bonds In a $600 million bond offering - even though First Commonwealth sold no bonds. To have earned those fees, First Commonwealth would have had to have sold $57 million in bonds according to the bond fee schedule. It is unusual for a firm to do no work in return for fees. Indeed the other firms that received fees for this bond offering-including 11 other women- or black-owned firms-all sold bonds. Those 11 minority owned firms sold $51 million in bonds earning an average of $19,000 a firm-far less than First Commonwealth was paid. First Boston and Lazard say they made the payment to First Commonwealth in order to get picked by the state to sell bonds-and on that score they get little disagreement even from the man who heads First Commonwealth. “First Boston and Lazard received a preference for having black participation and they got the benefit of a bargain with me,” said Norbert A. Simmons, who headed First Commonwealth in an inter- view, with the New York Times. He readily conceded that his firm has no employees and no capital for bond underwriting. Mr. Simmons said he could help large firms meet their affirmative action goals and get government busi- ness especially at a time when governments across the country are trying to give more municipal finance business to minority- and women owned bond houses. “These kinds of arrangements happen all the time,” Mr. Simmons
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