Friday, February 12, 2016

Report: Swaps cost city, school district $331 million

The Pennsylvania Budget and Policy Center, a progressive-leaning government watchdog, is taking on Wall Street (without tents, we believe).

Report: Swaps cost city, school district $331 million

Courtesy of Pennsylvania Budget and Policy Center

The Pennsylvania Budget and Policy Center, a progressive-leaning government watchdog, is taking on Wall Street (without tents, we believe).

According to a report released by the group today, the city and school district have lost $331 million from interest rate swaps with big banks like Morgan Stanley and Goldman Sachs — and could lose $244 million more in future years.

Interest rate swaps are complex, risky financial agreements that dozens of local governments and school districts throughout the state entered into before the economic meltdown.

At a press conference this afternoon, the Policy Center's director Sharon Ward said the banks should return some of their expensive cancellation fees to the city and School District, as well as renegotiate the current swaps. She argued that they should be "good corporate citizens," especially because taxpayers bailed them out.

Ward was joined by an Occupy Phlly member, a public school parent/advocate, a former School District nurse and Anne Gemmell, the political director of Fight for Philly.

When a reporter asked if others, including the city, should also be held responsible for the swaps, Gemmell said, "Let's not forget that the city was not bailed out." She added that banks likely knew more about the future of swaps than city or school district employees.

You can download the Policy Center's full report here.

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Every year, city government spends slightly more than $4 billion. Where does all that money come from? More importantly, where does it go? Are we getting the most bang for our tax buck? “It's Our Money” is a joint project between Philadelphia Daily News and WHYY, funded by the William Penn Foundation, designed to answer these questions.

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