PARIS |
Oct 5 (Reuters) - Dexia "tricked" French towns into taking out complex loans that saddled them with crippling interest payments, mayors told a parliamentary hearing on Wednesday, ahead of an expected break-up of the crisis-stricken bank.
With a restructuring plan for the lender expected as early as Thursday, following a pledge from Belgium and France to guarantee its financing in the face of a dramatic share-price slide, some local authorities said now was the time to bring the business of local-government lending under tight control.
Specifically, they advocate putting the state back in the driving seat and banning risky, variable-rate products.
Several mayors have sued Dexia over these so-called "toxic" loans, which they say were presented as "fixed" interest-rate products pegged to exchange rates such as the euro-Swiss franc.
When the new rates kicked in, the local authorities saw their 4-percent borrowing rates shoot up in some cases to 15, even 24 percent, the mayors told the hearing at France's National Assembly.
"Fixed rate, fixed rate, fixed rate -- every time the same words," said Xavier Martin-Le Chevalier, mayor of the northwestern town of Tregastel, holding up Dexia's marketing documents. "There was indeed serious trickery."
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