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tv   Book Discussion on Capital Murder  CSPAN  October 3, 2015 10:00am-11:01am EDT

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he looks into the events that led to pennsylvania's capital, harrisburg, to be the first and only american capital city to file for bankruptcy. [inaudible conversations] >> welcome. i'm the director of the state library of pennsylvania. you are sitting currently in the law library which is in the process of being restored back to its original grandeur from when the building opened in 1931. and look at the beautiful murals. don't go over across the way and look at those murals, they're falling apart. the library's been in existence since 1745. ben franklin purchased the first set of our books, and they're still down in our vaults downstairs. at some point if you'd like to take a tour, we're very willing to give you tours.
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we do ask that they do -- they are done by appointment or when we have an open house. one basic housekeeping thing, would you please put your cell phones at least on silent, preferably off. we all know that it's irritating when we hear a cell phone ringing in the middle of a speech. today you're welcoming chris papst, the author of a narrative nonfiction book called "capital murder" which was first released in april of this year. mr. papst is currently an investigative reporter for abc news affiliate in washington d.c. before that he spent four years here in harrisburg covering the city's extraordinary financial collapse. now he has released a book sharing his experiences while detailing what went wrong. capital murder is a cautionary tale of what can happen when
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government is not adequately monitored. it portrays in vivid and personal detail how life deteriorates under the inept or dishonest administration. every municipality in america should understand what happened to harrisburg to avoid a similar fate. as americans, we must insure that what happened to harrisburg does not happen to any other city. that was why the week was written -- why the book was written. please join me in welcoming mr. papst. [applause] >> thank you. well, thank you, everybody, for coming out today on what might be the greatest weather day of the year so far. i was hoping for rain. but thank you so much for coming, i really appreciate it. and the reason that i wanted to come here today and the reason that i like to speak about this book is because of the significance of what happened in harrisburg, pennsylvania. over really the past 30 years.
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it hadn't been reported. people weren't telling the stories about what was going on in this city, how it rose from a really bad decade in the '70s and the '60s before that to becoming a wonderful city that then had to file for bankruptcy. on october 11, 2011, harrisburg, pennsylvania, did something that no other capital city in this country had ever done before. and in doing so, the city recaptured the historical significance that it once had. this is a city right now of about 49,000 people, about 48,000 people. there's not really that much big national news that comes out of harrisburg, pennsylvania. and some would say that's a good thing. if no news is good news. but what it also means is that the influence that area has often times doesn't have are the significance that perhaps it would if more news were coming out of that area.
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now, harrisburg used to be a very significant city in america. i give a bunch of examples in the book of how harrisburg forged the way that america moved forward with steel and railroads throughout the industrial revolution. this was a very significant city in america. and i tell one story -- actually, i guess it's two -- where during the civil war general robert e. lee marched his army of northern virginia twice trying to invade the north. first, he was stopped -- the first time he tried this, he was stopped in ante them. he was coming to harrisburg. this is where he wanted to be because harrisburg was the heartbeat of this country. like vein ares stretching out -- veins stretching out around the country, the railroads sent the goods and materials, the
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products, the soldiers for the civil war. and general lee knew if he could get here and he could disrupt the railroads which are just half a mile from where you're sitting now -- they're still here -- if he could do that, he could suffocate the north. that was the significance that harrisburg once had. there's not really anybody alive today that saw the significance of the city. but on that cold october night in 2011, harrisburg reclaimed part of that significance when it became the first capital city ever in america -- and still the only capital city -- to file for bankruptcy. this isn't supposed to happen in a capital city. capital cities are supposed to be recession-proof. that's why it's never happened before. you have 12 million pennsylvanians sending their tax dollars to harrisburg. you have tens of thousands of people coming into this city every day to work for the state. people that are paying taxes, people that are buying parking spots, buying food, buying gas
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and groceries. harrisburg, like other capital cities, has this economic driver that is supposed to prevent economic catastrophes from happening. that's why no capital city has ever filed for bankruptcy except for this one. so how did that happen? how could a city with that type of built-in financial infrastructure have such significant financial problems? that's why i wrote "capital murder." i wrote it because people in america need to learn. we need to learn what happened here so it doesn't happen to more of our cities. if more of our cities go through what harrisburg went through, america's going to be in a lot of trouble. and not just the people that live inside of those cities. it has other effects in the municipal bond market with loaning money to other cities. if many cities like harrisburg end up going bankrupt, that's going to affect municipal interest rates for many other cities. this is not just about
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harrisburg. this is not just about pennsylvania. this is about america. so inside the pages of this book, it took me four years to write this as i was a reporter for the local abc affiliate. it took me four years to write this book. and in that time i hope i have captured what this city did wrong so a lot of people can learn from it and other city leaders can learn from it. so as i do these speeches, a lot of people ask me why is it called "capital murder"? during my four years here as i investigated what was happening to the city, it was clear to me that this city was financially murdered. it was killed. but apparently, nobody caused the death. because the whole time that i worked here and up until this book came out and of after this book came out, there have been no charges. there have been no indictments, there have been no fines, there have been no restitution. the people that drove this city into bankruptcy faced no accountability.
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none. i thought that was wrong. the people of this city suffered when their government failed them, and we're going to get into a little bit later some of the examples of how people suffer when their government fails them. but the people here suffered, and nobody was ever held accountable for that. now, after this book came out, which we'll get into a little bit later as well, the historical significance of harrisburg took another giant leap. this just happened a short while ago, and we're going to get into that at the end of the book, at the end of the talk here. so the first thing that i want to do is i want to introduce you to the main character in this, in the book and also in harrisburg in general. this is mayor stephen reed when he was inaugurated. it's 1982. he ended up being mayor for 28 years. for seven terms he led this city from 1982-2010.
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from the time he was 32 years old, he left office when he was 60 years old. this is a man that took over a city that really nobody else wanted to lead. throughout the '70s, in the ten years of the 1970s, harrisburg, pennsylvania, lost 25% of its population. and that 20% of -- 25% of its population is the 25% of people that could afford to leave, leaving behind the 75% of the population that could not afford to leave. and when that 25% left, they took with it their tax dollars. they took with it their resources. they took with it their intelligence. they took with it what would make a city thrive left with that 25%. now, you combine that with the railroad that had already collapsed, the pennsylvania railroad was gone, the reading railroad was gone, the manufacturing was gone, and now 25% of your population is gone. in 1982 when he came into office, it was rumored that
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bankruptcy papers were left on his desk when he took office because the city was, it was dead. and i think if you look at the financials at that time, you would agree it was probably dead. twenty-eight years later he's still mayor. well, how did that happen? stephen reeled, i believe, absolutely loved this city. i believe that he wanted this city to thrive, he wanted this city to be great, he wanted the city to reclaim the historical significance that it once had. i compare him to bernie madoff. bernie madoff wanted his investors to succeed. bernie madoff wanted his investors to get rich. he wanted them to be prosperous. stephen reed didn't want to get caught. bernie madoff didn't want to get caught. they were both willing to do whatever they had to do because they were focused on their objective. it looks line stephen reed has
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been caught after this -- like steven reed has been caught after this book came out. we'll get to that a little bit later. but what he ended up doing was when he came into office in 1982 -- as i said, the city didn't really have much of a tax base. he couldn't really get revenue. so he had to use what i call financial tricks, accounting tricks. he had to find ways to get money to the city, and then he would take that money, and then he would reinvest it in the city. often times he would shuffle it around. he had a bunch of these schemes that he would do that people weren't really aware of. i'll give you a couple examples. in the early '80s he borrowed $300 million, a $300 million loan came into this city to build a dam across the susquehanna river a half mile wide, beautiful, giant river. it was a hydroelectric dam. many of you came in to work today, you may have crossed the susquehanna river. you didn't see a hydroelectric
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dam. but that money got loaned to the city, $300 million. stephen reed had no intention of ever building a dam. the people that signed off on that loan, there was no intention of ever building that dam. the intention was to reinvest the money. and as you reinvest the money, there are fees that are paid out. it's called arbitrage. and these fees are paid out. stephen reed would take the money from those fees, and that is one of the ways that he would get money to funnel back into the city. now, arbitrage has since been made illegal. you can't do that anymore. so he found more creative ways to get money from the city. and most of it involved the municipal bond market. it revolved around him working with wall street, getting wall street, the bankers, the attorneys, the accountants, the consultants to loan the city money, and in the process he would keep scraping off these fees. and he would use those fees to reinvest back in the city.
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and he'd keep -- he kept taking chances. and as he became more powerful and as he kept getting reelected over and over again, the chances that he would take, the risks that he would take just became greater until there was a final risk that he took that was something that should not have happened, and that's what ended up bankrupting the city. but during his time, during the time that he was mayor, wonderful things were happening in the city. again, in 1982 when he took over, crime was high, taxes were -- well, the tax revenue was low. morale in the city was low. and he was able to turn the city around. he won all sorts of awards. he won accolades. in 2006 the world mayor organization named him the best mayor in america. and the third best mayor in the world. that was 2006. five years later the city's bankrupt. he was doing all these things, but nobody really understood what was happening to the city.
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i only met stephen reed three times in the four years that i worked here, as much as i chased him around at his office and his house. i only had three encounters with the man. all three of them are detailed because all three of them led for a better understanding for me of how the city was but also of how he saw his role in the city. and the first time that i met him was in a national civil war museum for the tenth anniversary of that museum. and he had explained to me his philosophy when he was running harrisburg. and it involved institutions. what he said to me was when i took over harrisburg, it had no institutions. there was nothing here to draw people here. so he created those institutions. and as he created one institution, it would create momentum. and then he could create another. and then another. and then more people move into the city, and it starts this snowballing effect. and that was the way that he
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operated the city. and during the time that he was here, much of what you see around this city that's beautiful is a result of him. the ark a baseball team for the washington nationals, the harrisburg senators. stephen reed brought them here. all of city island. and city island is this gorgeous maybe half-mile-wide island right in the middle of the -- half mile long, i should say, right in the middle of the susquehanna river. it's gorgeous. it has this beautiful baseball facility that looks over the city, it has football fields, soccer fields, a train that goes around it for the kids. it has miniature golf, it has batting cage, boat rentals, us cream. that really is harrisburg's playground. stephen reed built that. the harrisburg hilton, beautiful harrisburg hilton. the whitaker center for the performing arts. the civil war museum. the pennsylvania national firemen's museum. harrisburg university. he created all of these institutions.
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using a lot of these financial tricks, reinvesting that money back into the city that he was getting through the municipal bond market, most of it with the lawyers and wall street that he was getting very, very cozy with. and they were more than happy to loan him this money even if a certain percentage of that money that was being loaned wasn't going to the project that it was originally loaned for. downtown harrisburg, second street, restaurant row. block after block of restaurants and bars. all of that was steven reed. people started coming back into the city. as i said, in the 1970s 25% of the population left this city. two decades after he was the mayor, the population started going up again. a remarkable turn of events. and that's why he was winning all these accolades, and that's why nobody was even running against him when he was up for re-election. multiple times he would get the republican and the democratic nomination. i say in the book and i firmly
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believe stephen reed became a dictator. nothing in this city could get done without steven reed's blessing on it. if you wanted to be a member of city council, you're not going the get on city council unless mayor stephen reed, the mayor for life, unless he supports you. if you're on city council and you don't do what he says, he doesn't support you for re-election, and you lose. if you want to be the treasurer, if you want to be the controller, you don't get to those positions unless he sports you -- supports you. if you want to open a business in harrisburg, you can't open businesses without his support. you can't do anything in this city without stephen reed's support. and the people allowed it to happen, happily allowed it to happen. he was winning re-election by incredible margins, especially when nobody was running against him. the people saw what he was doing. they saw these institutions, they saw what the city was in the '70s and early '80s, and they just believed in him.
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and they believed that everything that he was going to do was in the best interest of the city. the news media allowed it to happen, news media was not holding him accountable. and that was one thing that really troubled me when i got here as a member of the cbs affiliate. the television stations and the newspapers here just let him do whatever he wanted. and people knew what he was doing. it was no secret. people knew what he was doing with the bond market. i'm sure a lot of you have heard about the artifacts he was buying and selling. those weren't secrets. that was just stephen reed. he's got the best interests of the city at heart. stephen reed's not going to do anything to hurt this city. he's going to help this city. and that'sñr the way that aç lf people here looked at it. so to give you a little bit of background, i'm from pennsylvania. i grew up about an hour east of here, about 45 minutes, 50 miles west of philadelphia in a little town called halverson. and when i was growing up,
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harrisburg was -- this was not a city that you came to. throughout elementary and middle school a lot of times when you're kids, you go to the local capital to learn about government, to learn about how the municipal processes work, to meet your legislature. we never did that when i was a kid. this was a city that you just avoided because of the crime and because of the blight. it wasn't a place that you would bring kids. so in september of 2010 when i came to harrisburg to work, i went from -- i got, i graduated from university of pittsburgh, got my masters at temple. i flew out to wyoming, i worked in wyoming for two years, i worked in madison, wisconsin, for three years, and then i moved back to harrisburg. and when i came back here, i couldn't believe what i saw. i saw a thriving city. again, this is in 2010, a year before the bankruptcy. that's how fast this entire thing imploded. but i saw a thriving city.
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i saw young professionals walking around, i saw new buildings, new high-rises, a bunch of new businesses, trendy shops. none of this was here when i was growing up 20 years earlier, none of it. i couldn't believe it. it was great for me to see. i mean, pennsylvania's my home state. i wanted to see pennsylvania do well. i still do. i wanted to see harrisburg thrive, and it looked like it was thriving. now, when i got here, my news director had said to me that it looks like harrisburg is going through some financial issues. we don't know what those issues are yet, we don't know how bad it's going to be, but i had been a reporter in madison, wisconsin, which is another capital, and i had done a lot of capital reporting, and he said i need someone here just in case. i said, okay. it was like a homecoming for me too. few nobody knew what was going -- but nobody knew what was going to unfold over the next three years. and it was, it was something
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that i could never have predicted, and i don't think anybody could have ever have predicted what was really going to happen. and after four years and more than 2300 reports on -- 200 reports on city, i decided that i was going to write book the try the teach people what happened in harrisburg in the hopes that other places, other cities won't go down same path. so this is a picture of young stephen reed. he's probably about early 30s here. this is soon after he became mayor of harrisburg. and you can tell it's the early '80s with the glasses and the haircut. [laughter] and he was ambitious. people loved him. he's a guy that when you meet him, he's a very friendly guy, very warm. the type of guy that in a group setting he can make you feel like he's having a one-on-one conversation with you. he's incredibly articulate, very nice guy, very nice smile. just a very warm way about him. and this picture -- oops, hold
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on. that picture is stephen reed about the time that he left office. so you can see from here to there that those 28 years, they were rough on him. and it's also amazing to me to think that, i mean, 28 years is most of his adulthood that he spent in one job in the public running a city. and this was a man that many people thought was going to end his political career in the white house. before he even became mayor of harrisburg, he had served three terms in the state legislature and had already been a county commissioner. by the time he was 32. a lot of people thought his magic number was '84, 1984, the first year he could run for president. most people couldn't even understand why he would want to even be the mayor of harrisburg in 1982. so back on october 11th, back on
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the day the city council declared bankruptcy, i was in the room covering that city council meeting when harrisburg declared bankruptcy. and you really need to understand the scope of what was happening here. harrisburg was falling at an incredible rate financially. they were no longer paying their bills. they were no longer paying their debtors. they were no longer paying their workers. they slashed a massive amount of government jobs. the police, the firemen, nobody knew where their next paycheck was going to come from. the city had to try all types of different ways, selling tax liens, taking money owed to it early just to get enough money to pay its workers. and at this point it wasn't paying any of its debt. its general obligation debt, which is like the mortgage of a city that they use to buy fire trucks, police cars, it wasn't paying that debt. it wasn't paying anything.
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and wall street was really concerned because wall street had hundreds of millions of dollars in debt that steven reed took out tied up in this city. wall street wanted its money. wall street didn't care if police got cut and the crime rates spiked. wall street didn't care if firemen got laid off and they couldn't fight fires as well. wall street didn't care if taxes went up on the impoverished people of harrisburg. they didn't care if parking got more expensive, they didn't care if trash collections got more expensive. they didn't care what happened to the people of harrisburg, they wanted their hundreds of millions of dollars. and on that day, october 11, 2011, harrisburg city council said, no. you, you, wall street, you are just as responsible as stephen reed was or city council was back then for all that money that was loaned to the city. you signed those papers too.
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why are we the only ones that need to be held responsible now? so they filed for bankruptcy. all of a sudden the media, the global media converges on to harrisburg. everybody was here. it makes national news. al-jazeera's asking the question, is this the the end of american capitalism? because you have a capital city that has now filed for bankruptcy. again, the first one ever. that's how significant of a moment this was. and wall street was worried. wall street didn't want this to happen. let's say harrisburg goes bankrupt. let's say harrisburg reorganizes its debt and wall street doesn't get a lot of its money back, what's that going to encourage other cities around america to do? they're going to look at that example, and they're going to say harrisburg reorganized its debt, harrisburg didn't have to pay all that money back, why should we? wall street was worried. the legislature stopped the bankruptcy.
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the legislature, that gets a lot of campaign funds from wall street, said, you know what? i don't think we're going to allow this to happen. they threw out the bankruptcy. judge threw it out as well. but the significance of what city council tried to do -- and just look at this from the perspective of harrisburg's city council, there's seven members. they're part-time public servants. they wouldn't call themselves politicians. they would call themselves public servants. they make $20,000 a year. they don't have staffs. many of them don't have college degrees. they're grandparents, they're people that have lived in the city their entire lives, they're people that just love harrisburg. and they were willing to wage a war against multibillion dollar banks, and they didn't have enough money to buy the bullets. but they were willing to take that on, because they saw that there should be shared pain
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here. it's not just the responsibility of the harrisburg taxpayer when these cities go bankrupt. it's the responsibility of everybody involved who was willing to make those loans, give that money to the city. and harrisburg's city council went right after in them. it was a remarkable moment. unfortunately, it didn't last all that long. now, one of the -- when i was looking at, when i really started looking at what happened to harrisburg when i got here and i saw that the city was starting to -- the city was really starting to crumble financially, i kind of thought to myself, you know, how can this even happen? when i first moved here and my wife and i were looking at possible places to live, to rent or buy, every real estate agent that i would talk to, everybody that i would talk to said,
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listen, we just had this mayor of nearly 30 years. he was phenomenal. but now we have this new person that has come in, we're not too sure how she's going to lead the city. we really wish that we had this old guy back. and these -- i heard all these legends about how wonderful this guy was and how fantastic he ran the city. and, again, all these institutions that he was creating. but then i started looking at the numbers. now harrisburg's a city of about $48 million in the general fund budget. $48 million. in one project, the incinerator -- harrisburg has a trash-to-steam incinerator that it used to burn trash and make money -- that one project had about $350 million in debt. one project in a city that has a $48 million general fund budget. that didn't make any sense to me. but yet everybody that i was talking to was saying how wonderful this man was, this mayor that we had, and how
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wonderfully he ran the city. now, this was -- i didn't understand it. how could you say he ran the city this wonderfully when you're bankrupt, and this one singular project has $350 million in debt? so i started looking more into it, and i started to learn how he really ran the city. and that's when i started to figure out that this guy ran the city like a dictator. and like any other form of dictatorship whether it be a nation or whether it be a city, that form of government does not work, and harrisburg is just the latest example of that. and i started talking to people that were involved in city government, and they were all saying the same thing. you couldn't do anything in this city without stephen reed's approval. and if you, if you went against stephen reed, you were done. your business was done, your politics were done, your career in the city was done. and it was really difficult for me to understand that type of
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stranglehold that he had on the city. because i thought in america how can that happen? in america with a free and independent media, how can that possibly happen? in an america where people are voting for the people that they want to lead their government and you have all these first amendment rights, how could, how could a dictator happen? i didn't want to believe it. i didn't want to believe that one man could have that much power. and it wasn't until that i understood that he had that much power that i realized that it was necessarily important for me to write this book so other people can understand how you can acquire that much power. now, the main reason that harrisburg went bankrupt is because of what i just mentioned, the incinerator. and the incinerator was a trash-to-steam project that burned trash, and the city made money. well, the timeline goes like this, and this is the main reason that harrisburg went bankrupt. and it goes back to what i said before about steven reed having
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so much power and doing what he wanted to do that he kept taking financial risk. and he kept getting involved in these accounting tricks and financial tricks. and the incinerator trick that he got involved in was the one that ultimately did the city in. and this should not have happened. so in the early 2000s the epa comes in, the environmental protection agency, and says, listen, your incinerator is too dirty. shut it down. so the epa shut down the incinerate orer. and then -- incinerator. and then stephen reed had a decision to make, okay, what do i do now? they determined it would take a $125 million loan to retrofit this incinerator to meet the epa standards and get it burning again. ..
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>> >> one man actually
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predicted bankruptcy. he said if you take out this loan the city will open a grudge. the city council voted six / one it nearly unanimously of the $125 million and as a reporter looking alpinists bond dash that this i got here nine runs after he left office. i was not jaded by his appeal and the sea that is nearly unanimous the people of harrisburg did not want this project but the city council yearly unanimously approved it. that did not make any sense to me at all. later we find out there was a few hundred thousand
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dollars offered to the city council in exchange for votes and $1 million exchange hands with somebody involved in the project one of the offices. that may have something to do with that. so to make a long story short. over 15 years their higher a company to do retrofit that was significantly below the next highest bid may be one-third of what the next highest we would be to retrofit the facility he comes in and goes bankrupt the developer goes big kraft as he retrofits the facility.
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stephen read it takes out tens of millions of dollars more to hire another person to come in and finish the facility. it just didn't add up. and that's how you get in debt on one project when there is a general budget fund of $48 million. i started to look more into it is a dash as simple as the city take the almighty. and had to have a performance bond is supposed to be in there by law to protect the taxpayer in the event that it goes wrong in the commission of the
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project. the first proposal to the state had a performance bond the one that was approved did not to cover the entire project. the other aspect is that harrisburg hit the limit there is no limit how much a municipality can take out designed to protect the taxpayer. or if the loans were deemed so liquidating. the money taking out to retrofit the facility was paid for by the facility with the revenue because of the retrofit. because the project would pay for itself. that is a lot.
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-- state law. to have the certification. how did that even have been? that is what happens is surely after this book came out that we will get to. so the reason the city council was fighting is what happened to harrisburg is with the bond on the incinerator were issued the way to get money is to issue the bond and scrape the money off to reinvest -- reinvest with the museum and the artifacts.
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so $16 million in fees were paid out. money that goes to the professionals and wall street. though lawyers and bankers $60 million. all of this is paid out. and to make $60 million in fees can i imagine what those numbers are unfairly or pittsburgh or chicago or los angeles?
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especially when a city like harrisburg was not allowed to complete the bankruptcy file. why would he not? it is and that big of the deal. end we should all be held accountable. and with housing collapse in 2008 people were loaned money to buy houses that they never should have been loaned. harrisburg was loaned money by wall street that it never should have bemoaned. it is a similar concept for girl and then they paid the
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price for that. although if certain things happen to individuals to pay of price but to raise city perhaps you don't? to know that it will affect those individuals. but the people of this city suffered. that harrisburg became the 20th most dangerous city in america. 20th most dangerous in this country. little harrisburg. 49,000 people it didn't have money to repair streetlights or potholes' or do the things it needed to do to keep quality of life ashley people that were living here
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proposing calls for opening up for i covered this story on jane reversed a giant sinkhole for actually three that open and not far from here and when they opened all the utilities were cut off for the people that lived there and they had to evacuate. a bitterly cold day the susquehanna and it was freezing that day. i noticed there was a red light in someone's house i knocked on the door a woman answered. seven kids a single mom and refuse to go to a shelter. i am not taking my babies to a shelter. i cannot trust the baby there. no utilities. electric that was the only one because that was up top of water and sewer
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everything else was cut off if she was still living in the house. how is that right? that people that created the problem that she has to deal with but the school district in the city they wanted to cut all sports in the harrisburg school district i know how importuned they were to me growing up by which to the school board did -- a school board meeting the parents and kids were pleading but they didn't have any money. the people that did this that would loan the money or took the loans stephen read it they were not being held
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accountable and it was infuriating. i was talking to the people who were suffering i was looking into their eyes to see what they were going through at the same time people in their foreign sports sedans drive out of harrisburg to leave behind a broken city that they were responsible for creating. they were getting maddow as. widely report anything that is good? my definition is news that is the absence of diplomacy. and people helping other people is no longer normal? that is when it is in trouble. >> with the media sometimes we were reporting yet in
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after the state says you cannot file for bankruptcy and not be prone now then they say we will take you over. in the first in american history to be taken over by a state. the state takes over in the points receivers that is a fancy word for the person who is in control now to strip the elected leaders of their constitutional right then strips the people of harrisburg of their constitutional right to create a massive constitutional issue and also a racial issue because now you have a 75 percent minority democrats city imposed upon them by the old white republican governor in
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with their racial issue in the end this city imposes upon in harrisburg so then it was sold the city's assets we don't know if it will work in 2016 or 2017. and has already become his defeat -- historically significant and we can find out and learn what not to do its financial recovery plan does actually were given to were three years, then we
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can look to harrisburg what to do with a financial crisis. but we don't necessarily know so what can we learn? there is a couple things which is why i wrote "capital murder". the news media needs to be responsible to hold the people in power accountable. doing their jobs to make sure the people that are controlling the tax dollars those that make of laws do with the right way. the news media in harrisburg did not do that. i have a few other reasons but the people of harrisburg. ice understand the idea a man comes didn't -- comes in and keeping an office. we don't have to watch what
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he is doing. they need to learn that is not the proper way of a democracy should run. harrisburg is a perfect example. shortly after this book came out, here is the update he was charged with 499 counts from a jury in was indicted that includes racketeering racketeering, running corrupt organizations, theft , the reason i wrote this book is i felt harrisburg pennsylvanian was financially killed but nobody was held responsible then he was charged and held responsible but is significant not only to central pennsylvania but
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also to do at america that you cannot do what everyone to. but more significantly the attorney general said she is also looking at the lawyers, the accountants accountants, consultants us eat of wall street because much to like the city council said we all casualty of what the city went through. wall street got all the money back. he took the $100 million hit. and they got all of the money back which begs the question why not do it all over again? what is the incentive not to do it again? she said we will look at them.
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if we can prove they did something wrong we will charge will street. stephen read it did not do this alone he was the first to be charged he was the mayor for life the best in america but there will be more to follow. also the governor of pennsylvania has said he will look after wall street, the attorneys attorneys, bankers, accounta nts civilly to see if the state can get those fees back for harrisburg so they can have that many. these loans on the incinerator should not have been issued. that is a significant step for america because if our cities can be held accountable to put a great
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hardship on the residents of the save cities in the future because we go on the money we get the fees if anything bad happens newt cares. that is the significant historical significance wanted to 50 years ago the center of america. that could save other cities from a similar fate. does anybody have any questions i will be happy to take them. >> what were the lenders and
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insurers thinking for the people looking at the financial numbers why do they just let that continue? to somebody say it is just too incredible? there is another book with wall street how do they let this happen? >> the $16 million and who went to the royal bank of canada, it went to a lot of bankers and lawyers that you may know their names. there is only so many institutions that are involved. that is a significant issue with the civil criminal charges because it is the same organizations loading
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to all the municipalities in america. what i know is if the bonds don't get issued what is the incentive? then you go back to the idea even after the remarkable financial collapse, wall street still got all this money back. as they paid more for water with fewer policemen and few were firemen that wall street got paid. they got their money back so i understand the disincentive to not continue loaning money. that is why the civil and criminal charges that they're looking act is so remarkably important incentive be a city of 49,000 but a city of
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2 million this will be a very different situation a number of cities go to smaller cities to go bankrupt is the significant issue in america. >> were there lost opportunities to declare the emperor has no clothes. >> he was a very strong personality i don't think anybody wanted to take him on because nobody wanted to stop the progress you didn't want to be that person who reported and that it wasn't built as a result people were desperate for progress and when it started to come nobody wanted to get in the
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way the challenges politically got out of the way i talk about two instances when people did challenge him that had to deal with the harrisburg senators to the city was challenged and went to court did judge said you abuse your power as mayor you should not have done this by this time it was built so there was no punishment against him because he space can do whatever i want to buy get the team hear they will be here for good so the judge has already said the team is playing so i will let you go another instance he was challenged it had to
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deal with them moving of money around called harrisburg 13 and they took him to court said judges that case also agreed to say yes, you abuse your authority to shift this money around and doing what everyone but he said idb do have the best interest of harrisburg at heart so i will not punish you. get was systemic the judges would not hold him accountable the media would not that people let him do whatever you wanted and he drove the city into bankruptcy. it is hard for me to understand as i stand here now how he can hold that much power but i give example after example of how he did this. of he was brilliant how he went about this and it lasted 28 years he was doing
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these 28 years and nine months after or one year after he files for bankruptcy and now he might be going to jail. >> you mentioned in your comments referring to him as a wall street banker that made him an accomplice it in the aftermath of frankly he walked off the job to resign and in doing so made some statements to the effect there were political forces entering his performance about some errors --
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illegalities or did he testify to the grand jury to play a wider role in the outcome? >> i did not interview him for the book because i interviewed him a number of times when he was receiver when he first came to harrisburg he was appointed by the governor to run the city and people were skeptical because now they no longer have power over their city. and they were trying to get their money back. then this guy works for wall street so i was very skeptical and as a reporter i should not say this but he won me over i thought he was the right person to lead the city out of bankruptcy i was of the furthering in that belief because he said when
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he finally realized what happened and he saw how the bonds were issued in the city was running, wall street was composite he said ethically i cannot do this job anymore and he quit and called for an investigation this needs to look at criminally when he quit he hurt the city. it already wasn't paying the bills by him leaving a prolonged the suffering that i respected him when he said i cannot do this. i know too much. the people need to be investigated and the people of harrisburg need to have justice. to meet it doesn't mean that stephen reid goes to jail it doesn't even mean that wall street has to pay back the money to be held criminally
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or liable civilly. the people of need to find out what they crept did the city? was it a bunch of bad financial decisions over a prolonged period of time? but we don't know yet but we will. thinks for coming. [applause] >> providing interpretation sand in sites in the early
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'70s with mayor daley i am thinking we have moved to a new location but the same story is applying. thanks to the gas to enjoy our lunch hour events. we will have more in the future. [applause] [inaudible conversations]

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