Erica

Over 88,000 Petitioners Demand SEC Action on Toxic Swap Deals

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On Thursday, Grassroots Collaborative joined with organizations across the country including Americans for Financial Reform, CREDO Action, Rootstrikers and the Center for Popular Democracy to deliver a petition in which more than 80,000 Americans asked the Securities and Exchange Commission (SEC) to investigate the toxic swap deals squeezing cities and states across the country.

The 80,000 petitions were delivered to the SEC’s Chicago Regional Office. At the delivery, State Representatives Chris Welch and Robert Martwick were joined by Alderman Carlos Rosa. Also present were over a dozen community leaders, teachers, and social service providers.

These toxic swap deals contributed to budget shortfalls that led to schools closing in Chicago, water shutoffs in Baltimore, and devastating environmental and health issues in Los Angeles.  These same bad deals also helped lead to the bankruptcy of Jefferson County, Alabama and Detroit, Michigan.  The state of Illinois has already lost over $684 million to Wall Street banks on these deals and could be on the hook for an additional $870 million on November 27th if action is not taken.

In many cases, it appears that banks misrepresented the risk of these deals to cities, or omitted key information, in violation of fair dealing rules. The SEC has the power to order Wall Street to give back any ill-gotten gains if it finds evidence of wrongdoing. On Thursday, taxpayers and elected officials will ask them to do just that.

“These toxic swap deals have cost taxpayers across the country billions of dollars,” said Saqib Bhatti, Director of the ReFund America Project. “Because elected officials like Chicago Mayor Rahm Emanuel have refused to lift a finger to recoup losses, the SEC must act as the last line of defense to protect taxpayers’ interests so that we can fully fund services in our communities.”

“Predatory Wall Street deals are costing Chicago and other American cities billions of dollars,” said CREDO Political Director Murshed Zaheed. “It is long past time for the Securities and Exchange Commission to stop sitting on the sidelines and start protecting our communities from big banks.”

“In many places around the country, big banks appear to have violated their legal obligations of ‘fair dealing’ by overstating the benefits and understating the risks of deals that are now leaching billions of dollars from taxpayers and communities,” said Lisa Donner, Executive Director of Americans for Financial Reform. “The SEC should use their authority to investigate these deals, and to order disgorgement of ill-gotten gains if it finds evidence of wrongdoing.”

“The toxic swaps Wall Street peddled to our cities and towns are part of a parasitic business model that drains wealth from the real economy rather than creating value,” said Kurt Walters, campaign director of the Rootstrikers project at Demand Progress. “The SEC must launch an immediate investigation into how these toxic deals were pushed on our cities and towns – and force bankers responsible for fraudulent sales to return all ill-gotten profits back to the public.”

Erica Rangel, with Enlace Chicago, which operates one of two remaining CeaseFire sites operating in the state of Illinois told the crowd, “Right now the state of Illinois is cutting life-saving programs like CeaseFire, LIHEAP, and Senior HomeCare. The money being used to pay out on these toxic swaps isn’t being pulled out of thin air – it is coming from our communities and our programs. We need the SEC to understand the deadly consequences of these swap deals, this last weekend in Chicago we had 64 shootings. How many shootings could funding of vital anti-violence and social services prevented?”

“Across the country, people are calling on the SEC to investigate a small clique of banks that have drained massive public resources through complicated and likely illegal interest rate swap deals,” Illinois State Senator Daniel (D-17) told Grassroots Collaborative prior to the delivery. “Governor Rauner should not voluntarily pay out on these deals and seek to renew letters of credit with the state to ensure that the SEC has enough time to launch a thorough investigation of these deals. Our money should be going to schools and services not Wall Street banks.”

Photos available here

The petition signatures come from:

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Community Declares State of Emergency in Illinois

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On Thursday, while legislators in Springfield move towards stop-gap measures, a broad coalition of organizations representing residents being hurt by the continued state budget impasse will rally in support of a budget that fully funds the services and programs communities need.

The last twelve months have devastated the state: after-school programs have closed, summer jobs have been cut, anti-violence programs have been dismantled, public universities are at risk of shutting down, thousands of working families applying for child care assistance are no longer eligible, seniors and those with disabilities who apply are not receiving needed independent living services. The lack of a budget and years of disinvestment from vulnerable populations and communities of color has created a state of emergency in Illinois.

Meanwhile, rich individuals and wealthy corporations continue to profit from the budget impasse. Governor Rauner and his top donors like Ken Griffin have received tens of millions in tax breaks. Ken Griffin’s 2015 tax break alone is enough money to pay to restore funding for the anti-violence program CeaseFire and provide home care for 1,570 seniors. On Thursday, community residents will make clear that taking resources from seniors, children, and Black & Brown communities to pay for tax cuts for the rich is unacceptable.

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Wall Street Accountability

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Across the country, big wall street banks and financial institutions are making billions off of our cities, states and school districts through predatory (and potentially law-breaking) lending deals. In Illinois, big banks have taken more than $2.4 billion out of our state funds. These funds could have fixed the 2016 CPS budget crisis, provided domestic violence services for 31 years or funded child care for 102,000 Illinois families.

Rahm and Rauner have given the banks a free pass and looked the other way. Neighborhood leaders, parents, seniors, students, and teachers are standing up and demanding an end to this giveaway of our public money. Join us in an exciting campaign to win back hundreds of millions of dollars – we’re taking our money back and putting it into the communities we deserve!

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Who Broke the Economy

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Grassroots Collaborative conducts workshops on the economy, equity, and budgets for community members and organizations in Illinois. Working and middle-class communities face constant budget cuts, school closings, and threats of reducing wages and benefits, while the wealthy, corporations and big banks continue to reap record profits. Our interactive training provides vital information on who rigged […]

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Illinois People’s Agenda

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Counter to the narrative coming out of the Governor’s office, the People’s Agenda points out that the state of Illinois is not spending too much, but rather is spending too little. Illinois has the 5th largest economy in the country and is the 13th wealthiest state, yet ranks 47th in spending on K-12 education, higher […]

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Downtown Prosperity, Neighborhood Neglect

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Grassroots Collaborative’s report, Downtown Prosperity, Neighborhood Neglect: Chicago’s Black and Latino Workers Left Behind looks at the racial inequality created by city priorities through exploration of US Census data. The report lays out a sharp racial disparity in downtown job gains and losses.  From 2002 to 2011, Black majority city zip codes suffered a median loss of […]

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Take Back Chicago

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For too long Chicago city policy has been dedicated by corporate interests and downtown developers. Grassroots Collaborative, as well as our sister organization, Grassroots Illinois Action, are working to put control of our city back in the hands of our neighborhoods and communities. Working together with a wide set of organizations we are building a […]

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Turned Around

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A report by the ReFund America project on how the swaps that were supposed to save Illinois millions turned toxic. Illinois is in the throes of a major budget crisis. Even though residents have had to bear draconian cuts as critical services have been defunded, Wall Street has gotten a free pass in the state’s […]

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Illinois People’s Agenda

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In 2015 Grassroots Collaborative launched the Illinois People’s Agenda: a vision of reinvestment in the people of Illinois. The People’s Agenda provides a new path forward that creates jobs, grows the Illinois economy meets the challenges facing our state in a way that is fair and equitable to all residents and helps Illinois families prosper. […]

Illinois faces further credit dings and interest rate swap crisis

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Adding yet another blow to the moribund finances of Illinois, two major credit rating bureaus, Moody’s and Standard and Poor’s, last week gave the midwestern state another financial downturn; this time to just two levels above junk status, in view of the continued lack of a budget and the growing gulf between Republican Gov. Bruce […]