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Governor Rauner Leaves Public in Dark on Swap Agreements

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Illinois was in the national spotlight this week for taking action to hold Wells Fargo accountable for defrauding millions of customers. Illinois state Treasurer Michael Frerichs, Chicago City Treasurer Kurt Summers, and the Chicago City Council took action by withdrawing city and state funds and financial business from Wells Fargo. The move received coverage in the New York Times, USA Today, Wall Street Journal, Forbes, Bloomberg, CNN, LA Times, and Chicago Tribune

Governor Rauner also made an announcement about the state’s business with Wall St. Banks this week. On Tuesday, just prior to a scheduled press conference by SEIU Healthcare, the University Professionals of Illinois, and Grassroots Collaborative regarding the state’s toxic swap deals, Governor Rauner announced that he had reached agreements with five Wall Street banks holding interest rate swaps with the state of Illinois. But the Rauner administration isn’t releasing the terms of those agreements to the public.

In a release about the agreements, the Rauner administration repeatedly talks about mitigating risk and limiting the state’s exposure. Chicago Mayor Emanuel used very similar language to describe his actions regarding Chicago’s swaps just months before the swaps were terminated, costing Chicago taxpayers $400 million in fees. Governor Rauner has hired the same advisors used by the Emanuel Administration.

Also of interest, nowhere in Rauner’s statement does the administration claim that the new agreements will save the state of Illinois money. Is Governor Rauner the most modest elected official in the state? Or are there are no actual projected savings?

Based on what the administration has told the media, it appears that Governor Rauner renegotiated the credit rating trigger, a threshold that when crossed, causes the swap to terminate, incurring penalty fees. However, if the Governor does not take action to renew the Letters of Credit connected to the swaps, which are set to expire on November 27th, the swaps will still terminate, costing Illinois taxpayers close to a billion dollars. Rauner’s announcement may do little more than push an $870 million payout to Wall Street banks until after the election – which may have been exactly his intention.

Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details

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News Source:

 

October 4, 2016

Contacts:

nathan@grassrootscollaborative.org

Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details

Coalition of educators and human service providers skeptical, demand disclosure of agreement terms

SPRINGFIELD, IL – This morning, Gov. Rauner reacted to Illinois educators and human service providers who had gathered for a press conference to call on the governor to prevent a near $1 billion payout connected to toxic interest rate swap deals with big banks.

A last minute press release by the governor’s office said the state had reached new agreements on the swap deals that would “reduce the state’s financial risk.”  However, the release raises many questions.  It claims that “the new terms are more favorable to the state” but provides no details about the new terms or if the agreements save the state money.

“We want to see the terms of these new deals. Taxpayers deserve to know what the Governor has negotiated and if it benefits them or big Wall Street banks like JP Morgan Chase,” said Amisha Patel, Executive Director of the Grassroots Collaborative. “There is too much at stake for us to just take the governor at his word. Illinois taxpayers have already had more than $670 million taken away from our schools and universities and critical services like childcare, senior services, and violence prevention programs, in order to pay for Wall Street banks’ profits,” she said.

Organizers said any action that Governor Rauner has taken around the interest rate swaps and letters of credit is a result of the pressure they had put on him to stop paying Wall Street banks while universities and social services starve for funding.

When asked about the news from the Governor’s office, Saqib Bhatti, author of “Turned Around: How the Swaps that were Supposed to Save Illinois Millions Became Toxic,” commented, “The devil is in the details.  Mayor Rahm Emanuel made a similar announcement when he renegotiated toxic swap deals.  A few months later, Chicago taxpayers had to pay $400 million in termination payments. We won’t know the potential impact of Rauner’s agreements until we see the actual terms.”

Notably, the statement from the governor’s office does not offer any detail about the status of five Letters of Credit that are attached to the swaps that were renegotiated.  These Letters of Credit will expire on Nov. 27th, 2016, triggering a massive payout of nearly $1 billion that would have to be diverted from already hurting education and human service programs.   The Governor’s statement merely says the priority is to “renew or replace” the letters of credit.

John Miller, President of the University Professionals of Illinois Local 4100 said about today’s announcement, “We need to see these agreements.  And we need an announcement from the Governor that he is currently negotiating with the five banks in question.  Our state cannot afford a $1 billion payout to big Wall Street banks while our college students are leaving the state, because they don’t know if their university will be open two months from now.”

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Wall Street Accountability

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News Source:

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!

CAMPAIGN NEWS

fundyouth

Governor Rauner Leaves Public in Dark on Swap Agreements

by
News Source:

Illinois was in the national spotlight this week for taking action to hold Wells Fargo accountable for defrauding millions of customers. Illinois state Treasurer Michael Frerichs, Chicago City Treasurer Kurt Summers, and the Chicago City Council took action by withdrawing city and state funds and financial business from Wells Fargo. The move received coverage in […]

Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details

by
News Source:

  October 4, 2016 Contacts: nathan@grassrootscollaborative.org Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details Coalition of educators and human service providers skeptical, demand disclosure of agreement terms SPRINGFIELD, IL – This morning, Gov. Rauner reacted to Illinois educators and human service providers who had gathered for a press conference to […]

10644697_1114068615278304_226691550029644110_o(1)

Wall Street Accountability

by
News Source:

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 […]

Illinois faces further credit dings and interest rate swap crisis

by
News Source: , ,

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 […]

Monday Marks Second Hearing On Illinois’ Controversial Interest Rate Swaps

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News Source:

An Illinois House committee will hold a second subject matter hearing Monday morning in Chicago on the issue of interest rate swaps. City of Chicago Treasurer Kurt Summers is among those expected to testify before the House Revenue and Finance Committee. Last month, Summers urged three Chicago employee pension funds to consider joining class action lawsuits against banks in an effort […]

Experts Sound Alarm: Wall Street Banks Set to Shakedown Illinois for $870 Million Unless Springfield Acts Fast

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News Source: ,

Mayor Emanuel Paid Out Hundreds of Millions to Wall Street Banks on Swap Deals that Torpedoed Chicago and CPS budgets, Governor Rauner Urged to Not Repeat Mistake with State Swaps CHICAGO, IL – On Monday, the Illinois House Revenue and Finance Committee held a second subject matter hearing on interest rate swap deals that have […]

EndBadBankDeals

Failure of Emanuel Administration to Push Through Swap Payments a Victory for Working Families

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News Source:

The House failed to bring the Fair Tax Amendment (HJRCA 59) to a vote, missing the deadline for placing it on the ballot for the upcoming November elections. The Fair Tax amendment, that would have allowed voters to vote on a constitutional amendment to implement a progressive income tax enjoyed massive public support in both Democratic […]

Financial Experts and Social Service Providers Challenge State, Municipal, and CPS Payments to Wall Street Banks

by
News Source:

Chicago, IL – On Wednesday, a set of financial experts and social service providers gave testimony before the Illinois House Revenue and Finance Committee detailing how Wall Street banks have soaked all levels of government in Illinois for hundreds of millions of dollars through interest rate swaps and other complex financial deals. “In essence the […]

fundyouth

Governor Rauner Leaves Public in Dark on Swap Agreements

by
News Source:

Illinois was in the national spotlight this week for taking action to hold Wells Fargo accountable for defrauding millions of customers. Illinois state Treasurer Michael Frerichs, Chicago City Treasurer Kurt Summers, and the Chicago City Council took action by withdrawing city and state funds and financial business from Wells Fargo. The move received coverage in […]

Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details

by
News Source:

  October 4, 2016 Contacts: nathan@grassrootscollaborative.org Gov. Rauner’s announced agreement on swap payouts to Wall Street banks lack details Coalition of educators and human service providers skeptical, demand disclosure of agreement terms SPRINGFIELD, IL – This morning, Gov. Rauner reacted to Illinois educators and human service providers who had gathered for a press conference to […]

10644697_1114068615278304_226691550029644110_o(1)

Wall Street Accountability

by
News Source:

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 […]

Illinois faces further credit dings and interest rate swap crisis

by
News Source: , ,

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 […]

Monday Marks Second Hearing On Illinois’ Controversial Interest Rate Swaps

by
News Source:

An Illinois House committee will hold a second subject matter hearing Monday morning in Chicago on the issue of interest rate swaps. City of Chicago Treasurer Kurt Summers is among those expected to testify before the House Revenue and Finance Committee. Last month, Summers urged three Chicago employee pension funds to consider joining class action lawsuits against banks in an effort […]

Experts Sound Alarm: Wall Street Banks Set to Shakedown Illinois for $870 Million Unless Springfield Acts Fast

by
News Source: ,

Mayor Emanuel Paid Out Hundreds of Millions to Wall Street Banks on Swap Deals that Torpedoed Chicago and CPS budgets, Governor Rauner Urged to Not Repeat Mistake with State Swaps CHICAGO, IL – On Monday, the Illinois House Revenue and Finance Committee held a second subject matter hearing on interest rate swap deals that have […]

EndBadBankDeals

Failure of Emanuel Administration to Push Through Swap Payments a Victory for Working Families

by
News Source:

The House failed to bring the Fair Tax Amendment (HJRCA 59) to a vote, missing the deadline for placing it on the ballot for the upcoming November elections. The Fair Tax amendment, that would have allowed voters to vote on a constitutional amendment to implement a progressive income tax enjoyed massive public support in both Democratic […]

Financial Experts and Social Service Providers Challenge State, Municipal, and CPS Payments to Wall Street Banks

by
News Source:

Chicago, IL – On Wednesday, a set of financial experts and social service providers gave testimony before the Illinois House Revenue and Finance Committee detailing how Wall Street banks have soaked all levels of government in Illinois for hundreds of millions of dollars through interest rate swaps and other complex financial deals. “In essence the […]