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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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And I'm Audie Cornish. Back during the heart of the financial crisis, we told you about five school districts in Wisconsin that had borrowed nearly $200 million. They used the money to invest in some pretty complicated financial instruments called synthetic collateralized debt obligations. Their investments quickly became worthless, and the school districts filed a lawsuit to try to recover some of the money. Well now, three and a half years later, the lawsuit is at an end. NPR's David Kestenbaum of our Planet Money team tells us how things turned out.
DAVID KESTENBAUM, BYLINE: The paperwork for the investment, that alone was three inches thick.
SHAWN YDE: The original.
KESTENBAUM: Whoa. That's a huge book. Shawn Yde showed me this back in 2008. He runs the finances for the Whitefish Bay School District.
YDE: Yes. This is the closing document.
KESTENBAUM: This thing actually come in the mail? And then it just went on the shelf over there?
YDE: Actually, it's too big to fit in the shelf. So it was - it's been on my floor since.
KESTENBAUM: Yde said he and the other school districts were misled, weren't told what they were buying. They thought they'd just bought some boring corporate bonds. The story of these Wisconsin school districts, it's the story of the financial crisis. You got a complicated financial instrument. You got people who lost a lot of money. The school districts had borrowed $200 million and basically lost it all. And then you had everyone pointing a finger at someone else. Shawn Yde remembers his kids picking up a newspaper.
YDE: My two youngest read an article in the paper that was calling, you know, you know, these empty-headed people who invested in this should be fired and that type of thing. And, you know, that's - it breaks my heart. I sort of kind of get choked up.
KESTENBAUM: Now, three and a half years later, Shawn Yde has not been fired. He still has his job running the finances for the School District of Whitefish Bay. And for the school districts, the story has a happy ending. They are off the hook. They don't owe $200 million anymore. Now, debts don't just disappear. The money has to come from someone. And as with a lot of stories from the financial crisis, the money came from all over the world. The first place it came from was the investment bank that helped put the deal together - the Royal Bank of Canada.
It reached a $30.4 million settlement with the Securities and Exchange Commission. The second place the money came from was the brokerage firm in Saint Louis that helped sell the thing to the schools - Stifel Financial. The third place that took a loss, a German and Irish bank called Depfa that loaned a lot of money to the school districts. And just to be clear here, though these places all kicked in money, none of them accepted any blame. So officially, no one was responsible for a $200 million investment that ended in disaster.
When the last settlement came through, C.J. Krawczyk, a lawyer for the school districts, called everybody with the good news. Was there dancing in the school hallways? Not really.
C.J. KRAWCZYK: There was a surprising amount of numbness that had kind of developed over the years where I don't necessarily think it completely sunk in as it was happening, and I'm not sure it's sunk in yet.
KESTENBAUM: And as for the guy you heard at the beginning - Shawn Yde - the guy with the huge stack of paper? He explained the news to his kids as best he could.
YDE: Kids don't often sit and have conversations on CDOs.
Trying to get into the details of this particular transaction wouldn't be very fruitful in my house. I don't know that the kids would even understand how this all strings together.
KESTENBAUM: The strings go further than you might imagine. That German bank that loaned the school districts the money, it got taken over by the German government. Which means German taxpayers, German parents, in part, are bailing out schools in Wisconsin. David Kestenbaum, NPR News. Transcript provided by NPR, Copyright National Public Radio.