Looking like scenes from a "Transformers" film about taking revenge on ruling tyrants, scores of Los Angeles garbage trucks circled City Hall on July 1, breaking political silence over what they call taxpayer subsidies to Wall Street. The protesters were demanding that city officials crack down on banks charging "predatory" transactional fees instead of slashing jobs and budgets for essential services.
Council member Paul Koretz' motion demanding a renegotiation of excessive Wall Street fees passed a committee hearing unanimously as hundreds of labor and community activists protested outside backed by the rumbling of the green sanitation trucks.
Pressure is mounting on the Mayor's office to justify spending at least $300 million in Wall Street bank and management fees while insisting that city workers accept a three year pay freeze. While Mayor Eric Garcetti remains silent, other city officials are scoffing at the demands of "Fix LA", the labor-community alliance.
Koretz' motion opens only a small window into the crisis of unequal treatment, like the $65 million windfall which he says Bank of New York Mellon has obtained from a 2008 transaction. As the window into municipal finance is pushed open, cities everywhere are being revealed as passively acquiescing predatory Wall Street deals. A recent Brookings Institution report concluded that "a growing body of evidence...suggests that borrowing costs are too high. Given that the value of municipal bonds outstanding is $2.9 trillion, municipal borrowers and their investors are leaving billions of dollars on the table every year because of borrowing costs, fees, and other transaction costs. These costs are a drain on state budgets; (and) make investments in education, infrastructure, health care and utilities more expensive..."
Under conventional city accounting procedures, fees to financial firms are evaluated by making comparisons to the same practices in other cities, a circular process guaranteed to protect steadily rising profits, not by comparisons with cuts to other provisions of municipal budgets. In the case of Los Angeles, billions in taxpayer funds go to pay financial firms in transactional fees.
Cuts to those fees, or even a tiny Wall Street transactional fee, the equivalent of a sales tax on the rich, ould help balance the municipal budget without slashing funds for vital services like trash collection.