In a 14-0 vote, the Los Angeles City Council has embraced the demand of a grass-roots labor-and-neighbor coalition to re-negotiate costly Wall Street loans or terminate them altogether. The City leaders also are demanding scrutiny of the outsized-fees paid to Wall Street firms as part of a budgetary battle to "Fix LA" from a fate of declining city services and rising unemployment.
Excerpt from Fix LA's Press Release:
Los Angeles Becomes Largest U.S. City to Take Action on Toxic Bank Deals; Unanimous Vote Requires City to Renegotiate or Terminate Multi-Million Dollar Interest Rate Rip-Off on Behalf of Taxpayers
Unanimous City Council vote sends strong message to Bank of NY Mellon, Wall Street: LA is not your ATM
The Los Angeles City Council voted 14-0 Wednesday to renegotiate or terminate without penalty a toxic swap deal the City entered into with two Wall Street banks, Bank of New York Mellon and Dexia. The measure, advanced by Fix LA, a coalition of clergy, unions and community groups aligned to restore city services and expand middle class jobs in the public sector, could save the City as much as $138 million. The International Business Times, noting the significance, reported that Los Angeles is now the largest city in the nation “to challenge ballooning Wall Street levies that accompany similar interest rate swap deals throughout the nation.
The motion further calls on the banks to return unfair profits and fees paid since 2008, estimated at more than $65 million to date. The deal costs taxpayers $4.9 million annually.