The City of Oakland just offered Goldman Sachs a deal they can’t refuse: either renegotiate a toxic “interest rate swap” that costs taxpayers $4 million a year or never do business with the City of Oakland again.¹ If other cities follow suit, Goldman will have to change its ways.
Goldman is screaming that this is unfair, a deal’s a deal. A closer look shows that these “swaps” were created by Wall Street to “protect” cities from rising interest rates. But then Wall Street acted like the housing market was a casino and destroyed the economy. To help the economy recover and keep credit flowing, taxpayers bailed out the banks, and the Federal Reserve reduced interest rates to almost zero. The problem is that now Goldman Sachs gets to borrow money for nothing, and still make cities like Oakland pay 5%.
Oakland has already been forced to closed schools, libraries, and cut its police force. Goldman says the only way it will let the city out of its contract is to pay a $15 million penalty. Are you kidding me? Bailed out banks are literally profiting off the fact that they tanked the economy. Estimates show there are more than 1,100 swap deals out there costing taxpayers $2.5 billion per year.² Anyone can see this is not right. The Fed lowered interest rates to promote growth, not decimate our communities. Oakland’s City Council has had enough, so it’s decided to use the only leverage it has: refuse to do business with Wall Street crooks.
So far, Goldman has only offered to lower that $15 million penalty by $100,000. Pathetic. On Tuesday, activists will rally at Goldman Sach’s San Francisco headquarters. We need to show Goldman that this is just the beginning. If other cities paying for toxic swaps follow Oakland’s lead, Wall Street will have to start listening to Main Street.
Thanks for all you do,
Eddie Kurtz, Director of Campaigns