Three major labor unions in Chicago want Mayor Rahm Emanuel to end ‘toxic’ interest-rate swaps with banks — deals they say cost the city and the public school district more than $100 million annually.
The Chicago Teachers Union, AFSCME Council 31 and SEIU* Healthcare Illinois sent a letter to the mayor Wednesday, urging him "to immediately file for arbitration" under the Financial Industry Regulatory Authority "to seek a refund of sums expended on fraudulent interest-rate swaps."
The city should act "immediately," because the option for filing for arbitration could end as early as next month, the unions said.
“Ending these deals would generate additional revenue that would help the city meet a wide range of vital needs—mental health services, early childhood education, public safety and the growing pension obligation,” CTU President Karen Lewis, AFSCME Council 31 Executive Director Roberta Lynch and SEIU Healthcare Illinois President Keith Kelleher wrote in the letter.
"If the city does not act in this manner, we intend to pursue any and all alternative measures that could compel a reexamination of these highly questionable arrangements," the letter adds.
The unions point out in a news release that "these toxic swaps were entered into by government bodies in hopes of stabilizing their financial planning and protecting against major losses of public resources. But the banks’ failure to fully disclose the risks of these agreements has cost the public billions in cities and towns across the country."
Other cities are also looking at ways to end these deals, the unions said, adding that earlier this year an arbitration panel in Alabama "ordered a bank to pay Baldwin County Sewer Service back for all the money lost on bad swaps, plus terminate the deal with no penalty."
Read Progress Illinois' coverage of interest-rate swaps here
*The SEIU Illinois Council sponsors this website.