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Quick Hit
by Ellyn Fortino
3:07pm
Thu Jul 7

Chicago Activists, Lawmakers Deliver Petitions To SEC For Action On 'Toxic' Interest Rate Swaps (VIDEO)

Chicago community activists and local elected officials delivered 88,000 petition signatures to the U.S. Securities and Exchange Commission's (SEC) regional office Thursday morning, urging the agency to investigate complex financial agreements called interest rate swaps.

Those who delivered the petition signatures, collected online by the Grassroots Collaborative and several other organizations, say cash-strapped local and state governments are being squeezed by the "toxic swaps" they entered into with banks before the Great Recession. The complicated deals, which come with hefty penalties and termination fees, were intended to save taxpayer-backed organizations money, but they backfired when the economy crashed.

Quick Hit
by Ellyn Fortino
1:51pm
Wed Feb 3

CTU Closes Bank Of America Account Over 'Toxic' Interest Rate Swaps (VIDEO)

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.

PI Original
by Ellyn Fortino
3:25pm
Tue Jan 19

Report: Illinois Interest Rate Swap Deals Squeezing State Budget

Progress Illinois details the findings of a new report from the ReFund America Project about the financial costs associated with the state's interest rate swap agreements. 

Quick Hit
by Ellyn Fortino
3:41pm
Tue Jan 12

Chicago Progressive Aldermen: Put The Brakes On Swap Termination Payment Plan

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."

PI Original
by Ellyn Fortino
7:26pm
Fri Oct 23, 2015

New Accounting Rule Requires Cities, States To Disclose Tax Break Costs

Cities and states will have to disclose information about tax abatement agreements under new accounting standards issued in mid-August. Progress Illinois takes a closer look at the Governmental Accounting Standards Board's first-ever reporting requirements on the issue.

Quick Hit
by Ellyn Fortino
11:51am
Wed Sep 9, 2015

New Accounting Rule Requires Cities, States To Disclose Tax Break Costs

Government reporting on tax-based economic development subsidies will become more transparent under a new policy from the Governmental Accounting Standards Board (GASB).

That's the organization that sets accounting and financial reporting standards for U.S. states and localities.

Under GASB's "tax abatement disclosures" rule released in mid-August, state and local governments will have to disclose how much revenue they lose as part of income, property and sales tax breaks, including those designed for economic development purposes.

GASB said its new rule, the first of its kind, will make it easier to determine the impacts of tax abatement programs on a government's fiscal condition and ability to raise revenue.

"This new guidance will result in people who use governmental financial statements having access to essential information about the tax abatements governments enter into," said GASB Chair David Vaudt. "Not only will this mean that they'll have access to information that will allow them to better assess a government's financial health, but it will also make the impact of these agreements much more apparent."

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