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Jun 5, 2006

Source: Bayou Buzz

New Orleans Bank Loans

New Orleans Bank Loans Needs Quick Certainty For Economy
Author: Steve Sabludowsky | 6/5/2006

When C. Ray Nagin first announced possible bank loans from Chase and foreign investors, a number of his opponents during the
general election were talking about bankruptcy based upon a concerned report from the Bureau of Governmental Research.
Bankruptcy was being considered an option by the candidates—but only as a last resort.

During that televised debate, Nagin disclosed he was working with some banks but could not provide any details.
After the debate, I wrote that Nagin would need to show us the green stuff.

As the runoff season wore on, the news media began to ask further questions about the loan. After the WWL debate, Nagin gave
further details to me about the priorities of various lending institutions including a French bank.

On election eve at midnight, Nagin released even more details about the pending loan including the names of the banks involved.
The more certainty of the loan might have played a role in the minds of some of the voters who felt Nagin was working hard to secure
financing although there were very few details related to interest rates, term and other factors.

Yesterday, the Times Picayune discussed the loan and based upon those details we know there is a “rosy scenario” and a more “bleak”

The loan would need approval from the City Council and the State Bond Commission.

So, the green stuff is not running yet in the Halls of the City and will need to find a straight path without major obstacles.
One such obstacle is the question of repayment. There are factors such as population certainty, franchise fees, real estate
assessments, sales taxes and other fees and fines and everyone has an opinion on how rosy is the scenario.

Then, not mentioned in the TP article is the Darth Vader of them all—another catastrophic hurricane that could drown the growing
enthusiasm of the rebuild. Should that occur—I would assume all bets would be off.

Complicating matters is the City Council will be no pushover.

While the City cannot survive without the loan, you can bet the Council will not rubber stamp it. There is a new council and they will
ask questions just to flex their muscles.

There is no doubt that reasonable professionals will differ over whether the New Orleans economy is half empty or half full but it an
absolute certainty that nobody can accurately project any working model due to so many uncertainties out of the control of the City.

For one, we have no idea if New Orleans will get any more money from the federal government for housing although Alphonso Jackson
of HUD has assured Governor Blanco and the Mayor that Bush is committed to his word. However, Congress did not make a speech in
Jackson Square on that warm September night and they can be persuaded by President Bush, but, right now, Congress does not fear
the President. In fact, you might even see Congress people refusing to appear with Bush on the campaign trail since his polls are so

So, the loan that was, still probably is. With the elections out of the way, Nagin has more clout and much more space to maneuver.
And, while others were talking bankruptcy, he was working hard to save the city. But, don’t think it will all be a cakewalk to the loan closing.
Uncertainty does prevail and the City Council will not play patsy right now while it is finding its own feet. Yet, in the long run, unless they
have viable solutions or alternatives they need to move this process so New Orleans can work its green gris gris.

Jun 5, 2006

Source: Bayou Buzz

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