(Full story)
By Lionel Laurent
PARIS, France, Oct 12 (Reuters) - French towns that say they were tricked into taking out risky loans from rescued lender Dexia are refusing to repay them in full and are asking President Francois Hollande for a bailout.
Franco-Belgian municipal bank Dexia was propped up with billions of euros of public money last October, when it become the first banking victim of Europe's debt crisis after its strategy of using short-term borrowing scheme to finance long-term lending came unstuck.
Those loans included an estimated 13 billion euros of risky structured products that went sour after the 2008 financial crisis, saddling thousands of French towns with crippling interest rates.
Frustrated by what they perceive as government inaction over the mounting repayments, mayors in a handful of the towns are tearing up their contracts rather than pay the state-rescued bank with money raised from tax hikes or spending cuts.
"I was not elected to raise taxes and to have those taxes go directly into banks," said Xavier-Martin Le Chevalier, mayor of the northwestern coastal town of Tregastel. "Directly or indirectly, the state will end up having to pay the bill."
By Lionel Laurent
PARIS, France, Oct 12 (Reuters) - French towns that say they were tricked into taking out risky loans from rescued lender Dexia are refusing to repay them in full and are asking President Francois Hollande for a bailout.
Franco-Belgian municipal bank Dexia was propped up with billions of euros of public money last October, when it become the first banking victim of Europe's debt crisis after its strategy of using short-term borrowing scheme to finance long-term lending came unstuck.
Those loans included an estimated 13 billion euros of risky structured products that went sour after the 2008 financial crisis, saddling thousands of French towns with crippling interest rates.
Frustrated by what they perceive as government inaction over the mounting repayments, mayors in a handful of the towns are tearing up their contracts rather than pay the state-rescued bank with money raised from tax hikes or spending cuts.
"I was not elected to raise taxes and to have those taxes go directly into banks," said Xavier-Martin Le Chevalier, mayor of the northwestern coastal town of Tregastel. "Directly or indirectly, the state will end up having to pay the bill."
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