One day after Chicago Public Schools officials announced $100 million in proposed budget cuts, the Chicago Teachers Union closed its Bank of America account on Wednesday in protest over the controversial interest rate swap agreements held between the bank and school district.
CTU says cash-strapped CPS, which is facing a $480 million budget hole this fiscal year, has lost more than $502 million to "predatory" swap deals with financial institutions, including Bank of America. According to the union, Bank of America has collected $77 million in profits off of its interest rate swaps with CPS.
"What we hope is that our withdrawal of funds will spark people all over this city, all over this state and all over the country to start withdrawing funds from Bank of America until they give back some of the ill-gotten gains they've made off the backs of our students," CTU Vice President Jesse Sharkey said outside the Bank of America at 135 S. LaSalle St.
Chicago's Progressive Reform Caucus wants the Emanuel administration to "delay or abandon" its proposal to use roughly $100 million in borrowed money to pay termination penalties for interest-rate swap agreements.
The caucus opposes the "Emanuel administration's plan to voluntarily pay massive interest-rate swap termination penalties" because it could result in "windfall profits for big banks" and cost "taxpayers more over the next few decades," Ald. Scott Waguespack (32nd) said during a press conference at City Hall on Tuesday.
The interest-rate swap agreements in question, held between the city and financial institutions, date back to former Mayor Richard M. Daley's administration. The $100 million in swap termination payments is part of a $2 billion borrowing package set to go before the Chicago City Council on Wednesday.
"The administration has said we're getting out of these risky deals, but what we're getting out of this deal is an irresponsible financial move by the administration," Waguespack said. "We need to stop this plan, abandon it today, and not move forward on behalf of taxpayers."
Environmentalists are putting pressure on Morgan Stanley to cut its financing ties to the coal industry as part of a larger disinvestment campaign aimed at big banks.
Organizers with the environmental group Rainforest Action Network (RAN) urged the investment firm to end its financing of coal mining and coal power during Friday protests held outside Morgan Stanley branches in nine major U.S. cities, including Chicago.
"Morgan Stanley is one of a few remaining large banks that is still funding dirty coal," said Chicago RAN volunteer Charlie Ryan, who distributed flyers about the anti-coal campaign outside a downtown Morgan Stanley location at 440 S. LaSalle St.
"If you look at some of the things they're doing, for example, they continue to finance mountaintop removal. Mountaintop removal is one of the worst ways to mine coal. They blow up the mountain. They don't repair it."
While the Bond Buyer's Midwest Municipal Market Conference was being held Tuesday at the InterContinental Chicago hotel on Michigan Avenue, over a dozen Chicago Teachers Union (CTU) members and their allies protested outside the event this morning.
Holding signs reading, "CPS: Broke on Purpose," the education activists were there to highlight controversial financial deals the Chicago Public Schools (CPS) has with banks and to call for fair-share revenue options to help tackle the school district's pressing fiscal issues.
Those at the protest, spearheaded by the Caucus of Rank and File Educators (CORE), marched in a circle chanting, "Fat cats profit and kids come last. Who pays taxes? The working class."
"There's been numerous long-term financial deals, bond deals, swap deals that have put CPS under a heavy burden of debt," explained CTU organizer Martin Ritter. "They've got bad financial advisers. Many of them are at this conference."
If Illinois small business owners were to collectively offset state and federal revenues lost annually due to corporations using offshore tax havens, they would each have to pay $4,570 in additional taxes a year.
That what-if scenario is laid out in a recent report from the Illinois Public Interest Research Group (PIRG) examining the issue of "corporate tax haven abuse" and what it means for small businesses.
Through the use of accounting "gimmicks" to shift profits offshore, corporations avoid paying $110 billion annually in federal and state income taxes combined, according to Illinois PIRG's "Picking up the Tab" report. Specifically, about $90 billion in federal and $20 billion in state corporate income tax revenue is lost each year to tax havens, the research reveals.