The Oakland City Council voted unanimously this week to stop doing business with Goldman Sachs if the company does not agree to cancel an investment deal that is costing the city $4 million this year. “This is a growing movement to bring accountability and responsibility for people that took billions of taxpayer bailout dollars and who are now not willing to pay it forward,” said Councilmember Rebecca Kaplan said. Councilmember Jane Brunner, who made the motion, called for ending the national “double standard” that has bailed out banks and left cities to suffer and go bankrupt. ”It’s time to stop this,” said Brunner. “I am proud to be on the city council that may be one of the first city councils that is going to do this.” However, according to an opinion of City Attorney Barbara Parker, Oakland might not legally be able to break the deal with Goldman. Oakland and other public agencies are involved in over one thousand investments in interest rate swaps with investment banks that are costing taxpayers about $2.5 billion a year. Oakland in 1998 entered into the deal with Goldman to protect itself from potential interest rate spikes on city bonds used to fund police and firefighter pensions. But interest rates have remained low, and the city is paying the company an interest rate that is much higher than the prevailing rate Goldman pays Oakland. The city has paid Goldman about $32 million more than it has received so far on the deal, according to labor and other community leaders, and may lose another $20 million before the investment expires in 2021. City negotiators have been meeting Goldman for six months about reducing the estimated $15 million cost to terminate the agreement but have had no success. According to community opponents of the swaps, local governments across the country are losing money on deals like these, with more than $529 million per year being lost to interest rate swaps just affecting transit.
Goldman Sachs Sacked
Filed under: Articles