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The Big Bond Borrowing Problem at Brown University
Roland Martin: Why would aa university that's sitting on billions and billions of dollars need to borrow money to buy a luxury dorm? He says it's an arbitrage. You can get a higher rate of return by keeping your capital invested than the interest on the loan you take out to build the stadium, he says. The crazy thing is, those bonds that brown university and all private universities can use are tax exempt, so there's a tax subsidy to subsidice this arbitrage," said Martin.