Wall Street Crisis Snares Main St. Schools
WHITEFISH BAY, Wis. (CNNMoney.com) -- Lehman Brothers. Washington Mutual. And now ... Whitefish Bay Schools?
The global financial crisis that claimed some of the world's biggest banks now has this suburban Milwaukee school district and four others on the brink of losing a hefty $200 million investment.
Two years ago board members from the districts signed off on an investment to fund their teachers' retirement and health care benefits.
Shawn Yde, business director for the Whitefish Bay School District, says he and his board members were told they were making a conservative investment in "AA" and "AAA"-rated bonds. Mark Hujik, from the Kenosha school board, says he and other board members were told they were investing in highly rated, and relatively safe, corporate bonds.
But instead of buying corporate bonds, the school districts actually purchased one of Wall Street's most complex financial instruments: synthetic collateralized debt obligations (CDOs).