High-risk investments cost Detroit $408 million: Fallout could affect millions

The Detroit Free Press reports:

It was a poker game that began around 1999, pitting the City of Detroit against some of America's largest banks.

Trying to cut costs when it borrowed more than $2 billion for everything from laying sewer pipe to shoring up pension assets, Detroit bet that interest rates would go up.

The banks bet rates would stay the same or fall.

So far, Detroit has lost and booked a paper loss of $408 million, a Free Press investigation shows. Moody's Investors Service in December downgraded Detroit's water and sewer bond rating, citing its exposure in interest rate gambling.

Would you want these people to run your health care plan or educate your children?