CHICAGO, IL – The Emanuel Administration’s plan to voluntarily pay $106 million in predatory interest rate swap termination penalties failed to gain City Council approval Wednesday. Thanks to the bold efforts of the Progressive Caucus and grassroots leaders, $200 million in water revenue bonds, which included funds to pay the voluntary termination penalties, were removed from the borrowing bill before being voted on by the council.
“Today shows that these predatory interest rate swaps can not stand the light of day. When we have Aldermen, like the Progressive Caucus members, who listen to community leaders and dig into what is in these interest swap deals it becomes clear that they are designed to benefit Wall Street and not the people of Chicago,” stated Amisha Patel, Executive Director of Grassroots Collaborative, following Wednesday’s City Council meeting. “When Neighborhood residents find out they are expected to pay higher property taxes at the same time the Mayor is voluntarily handing over millions of dollars to Wall Street banks they are justifiably outraged.”
“The City of Chicago and Chicago Public Schools have already paid more than a billion dollars in swap payments and penalties, even though many of the banks that sold us these deals have admitted to manipulating interest rates to pad their profits,” said Saqib Bhatti, Director of the ReFund America Project. “We should follow the lead of other cities like Houston and Philadelphia that have sued banks to recover swap losses instead of rushing to pay penalties to exit the deals. The City Council took a great first step today by blocking this voluntary Wall Street giveaway. Now we need continued leadership from our elected leaders to recover taxpayer losses from these toxic swaps.”
Grassroots Collaborative continues to work to educate both voters and elected officials about these predatory interest rate swaps. The City of Chicago and Chicago Public Schools are on track to lose over $1.4 billion on interest rate swap deals.
Grassroots Collaborative has developed a voter education curriculum to increase understanding of the role of Wall Street banks in the City and State budget, including predatory interest rate swap deals. For the last three months the Collaborative has been training reaching thousands of community grassroots leaders.
Grassroots Collaborative is Action Now, American Friends Service Committee – Great Lakes Region, Brighton Park Neighborhood Council, Chicago Coalition for the Homeless, Chicago Teachers Union, Enlace Chicago, Illinois Hunger Coalition, Jane Addams Senior Caucus, ONE Northside, Service Employees International Union Healthcare Illinois Indiana