On Tuesday, the Pennsylvania Budget and Policy Center released a new report documenting the millions of dollars that interest rate swaps promoted by bailed-out financial institutions have cost the City and School District of Philadelphia.
Swap deals negotiated with banks such as Wells Fargo, Morgan Stanley and Goldman Sachs have cost the city and school district $331 million in net interest payments and cancellation fees, according to the report, “Too Big to Trust? Banks, Schools and the Ongoing Problem of Interest Rate Swaps.” If interest rates continue to remain low, still-active swaps could cost the city another $240 million in future net interest payments.
Fight for Philly joined the PBPC – and a host of community organizations including P.E.A.C.E., Jobs with Justice, ACTION United, Parent Power, Neighborhood Networks and Occupy The Dream – at the press conference and policy debrief discussing the findings of the report with City Council members, media and citizens. PBPC Director Sharon Ward noted that while taxpayers provided billions of dollars in bailouts to banks in the wake of the financial crisis, municipalities and school districts have been forced to cut services and lay off staff without receiving any financial consideration from the banks for the high cost of swap deals.
Three everyday Philadelphians that have been affected by these bad swap deals showed the real human cost of these deals gone wrong. Gloria Thomas, a parent of a public school student and secretary of Parent Power, spoke about how the school budget cuts are destroying our schools. She explained how “the financial situation in the Philadelphia School District has left Principals with the inability to adequately fund [school] programs.”
Gina Apuzzo also expressed her frustration with the banks. Gina, who is to stand trial in a few weeks for participating in a “citizen’s foreclosure” of Wells Fargo, said with great deal of sadness that “Big Banks like Wells Fargo accepted bail outs funds from tax payers, yet continue to engage in…predatory lending, foreclose on families…and all while continuing to make record profits by taking millions from our city.” She ended by promising that “we will continue to stand with the individuals and organizations here, today, to demand that Big Banks repay the money they’ve cost our school district and city.”
Michelle Perloff, a public school nurse that was recently laid off. Her powerful words spoke of the dire need for school nurses, and how they play a critical role. She explained how it’s not fair that our children have to pay the burden for the millions lost from bad deals that Big Banks steered our schools into.
As questions wrapped up, the room broke into energetic conversations about next steps between community leaders, press and Council staff. Fight for Philly will continue to put the pressure on the banks to be good corporate citizens by paying back the cancellation fees they received for terminating bad deals and renegotiating those deals which are currently active.