re: What is the purpose of swaps?

If the county bought the SWAPs for the sole purpose of speculating on future interest rates, whoever did it should be fired.

When Bill Clinton was first elected President, Bank of America anticipated that interest rates would skyrocket like rates did the last time a Dem President (Carter) was in office.

So BoA bought tens of billions of dollars of variable rate SWAPS based on pure speculation that rates would increase and not for the purpose of protecting the bank's balance sheet position.

Of course, we know that rates declined over Clinton's two terms and BoA had to take a huge loss (several billion dollars' worth) and several heads at BoA rolled when they made the announcement of the loss resulting from selling their speculative SWAP position.