Rahm Emanuel
Mayor of Chicago
By Elaine Magliaro
While I was doing research on my post about Chicago Mayor Rahm Emanuel accepting campaign contributions from financial firms managing city’s pension money, I came across another interesting story about Emanuel being involved with risky interest-rate swaps. Heather Gillers of the Chicago Tribune said that the mayor of Chicago distanced himself earlier this week “from the risky derivatives that are draining funds from the city’s school system…” According to Gillers, Emanuel declared, “Under my tenure, there have been no swaps.”
But Gillers reported that “records show the city of Chicago has entered into at least four interest-rate swaps under the Emanuel administration.” She said that the swap deals “brought the city nearly $20 million upfront but will require regular payments for up to 30 years, much like the derivative deals sapping Chicago Public Schools.”
Gillers said that the Chicago Tribune’s series “Borrowing Trouble” found that the Chicago Public Schools’ “decision to issue $1 billion in auction-rate debt paired with interest-rate swaps will likely cost $100 million more than what the school district would have paid for traditional fixed-rate debt. One draw of those risky deals was the hefty upfront payments that accompanied some swaps.”
Gillers said that the “Tribune analysis sparked questions from reporters after the City Council meeting Wednesday.” She noted that Mayor Emanuel “was quick to point out that his administration has canceled derivatives the city entered under Mayor Richard M. Daley.” He was quoted as saying, “Under my tenure, there have been no swaps, and we actually terminated nearly about a billion dollars in value of swaps. So I’ve been clear about righting the ship going forward.”
Gillers reported, however, that records “show that the four swaps entered by the Emanuel administration are linked to existing debt — floating-rate bonds issued in 2003, 2005 and 2007, under Daley.” She added that “records obtained by the Tribune show new contracts with new banks, layered on top of existing swaps, in effect creating double swaps on the old debt.”
Gillers:
When the Tribune contacted City Hall on Thursday, the mayor’s office described what the Emanuel administration has done as modifications of existing swap deals.
The four swaps entered in December 2011 and February 2012 under Emanuel “are not new swaps,” the mayor’s office said in a statement. “They are modifications to the original underlying swaps, all of which were inherited by this administration.” A spokeswoman for the mayor’s office said the Tribune is “parsing words” by reporting that the Emanuel administration has entered into new swaps.
A letter the city provided to the Tribune in September offers a nuanced assessment of the Emanuel administration’s record. That month, the city’s chief financial officer wrote to union representatives, who have been critical of city and school swaps, that the city has not entered swaps on “additional debt.”
But Gillers said that a document that was provided to the Tribune months ago in response to a public records request shows that the Emanuel administration entered into four swap deals. The document, titled “City of Chicago Swap Portfolio,” is from December 2012. Gillers said that in three of the four swap cases, “the Emanuel administration was trading a more predictable arrangement for a less predictable one…”
Gillers reported that experts said that three of the four “new swaps increase the unpredictability of the city’s interest payments…” One of the experts called the new derivatives “speculative.” Matt Fabian, a managing partner at Concord, Mass.-based Municipal Market Advisors, said, “Basically what they wound up doing is speculating on interest rates. It might work out well.” But Fabian added that “the Emanuel administration was trading a more predictable arrangement for a less predictable one” in three of the four swap deals.
Gillers’s article has more complicated information regarding the swap deals, which I won’t go into. You can read her article here.
SOURCES
Emanuel says he didn’t do risky interest-rate swaps, but he’s done 4 (Chicago Tribune)
Watchdog: Borrowing Trouble (Chicago Tribune)
Nicole Plyler Fisk
Gene Howington
FFS Guest Blogger
Joy of Fishes
Chuck Stanley
shortfinals
Terry Welshans
ann li-summers
wordcloud9
Flowers For Socrates 
Neo-Liberals like Rahm can’t be trusted because they actually have a belief in the “sacred nature” of “Free Market” Theory, which in the end is just a con game. There are no “free markets” and there never have been.
Mike,
I agree. The neo-liberals aren’t liberals at all. Most are beholden to Wall Street/their corporate masters.
Neoliberals and neoconservatives are really just one thing at their core: fascists (you could even argue technofascists). The only substantive difference in them is how they choose to deploy force internationally. Neither are truly liberal or conservative viewpoints and both tend to be right of center to far right in practice.
I’m sure this will sound familiar:
Neo-conservatism preaches military superiority for the economic benefit of its adherents while neo-liberalism preaches free trade with the stick of economic and/or military reprisal for non-conformists.
Both arrive at the same juncture through different means; the juncture being the eradication of the commons.
It’s all word play, really, as neo-liberalism sprang up in the 1930’s, yet traction of belief did not hit the ground until 1980 or so.
Both are race-to-the-bottom perspectives, with the self-appointed labels accomplishing nothing but to gain “sound’s good” adherents.
Henry A. Giroux | Marching in Chicago: Resisting Rahm Emanuel’s Neoliberal Savagery
5/20/13
http://truth-out.org/opinion/item/16478-marching-in-chicago-resisting-rahm-emanuels-neoliberal-savagery
Excerpt:
Across the globe, predatory capitalism spreads its gospel of power, greed, commodification, gentrification and inequality. Through the combined forces of a market driven ideology, policy and mode of governance, the apostles of free-market capitalism are doing their best to dismantle historically guaranteed social provisions provided by the welfare state, define the accumulation of capital as the only obligation of democracy, increase the role of corporate money in politics, wage an assault on unions, expand the military-security state, increase inequalities in wealth and income, foster the erosion of civil liberties and undercut public faith in the defining institutions of democracy.1. As market mentalities and moralities tighten their grip on all aspects of society, democratic institutions and public spheres are being downsized, if not altogether disappearing. As these institutions vanish – from public schools to health-care centers – there is also a serious erosion of the discourses of community, justice, equality, public values and the common good. One does not have to look too far to see what happens in America’s neoliberal educational culture to see how ruthlessly the inequality of wealth, income and power bears down on those young people and brave teachers who are struggling every day to save the schools, unions and modes of pedagogy that offer hope at a time when schools have become just another commodity, students are reduced to clients or disposable populations, and teachers and their unions are demonized.
Chicago Mayor Rahm Emanuel’s current attempt to close down 54 public schools largely inhabited by poor minorities is one more example of a savage, racist neoliberal system at work that uses the politics of austerity and consolidation to further disenfranchise the unskilled young of the inner city. The hidden curriculum in this instance is not so invisible. Closing schools will result in massive layoffs, weakening the teachers unions. It will free up land that can be gentrified to attract middle-class voters, and it will once again prove that poor minority students, regardless of the hardships, if not danger, they will face as a result of such closings, are viewed as disposable – human waste to be relegated to the zones of terminal exclusion. Not only are many teachers and parents concerned about displacing thousands of students to schools that do not offer any hope of educational improvement, but they are also concerned about the safety of the displaced children, many of whom “will have to walk through violent neighborhoods and go to school with other students who are considered enemies.” 2. This is not simply misguided policy, it is a racist script that makes clear that poor black youth are disposable and that their safety is irrelevant. How else to explain the mayor’s plan to produce a Safe Passage Plan in which firefighters would be asked to patrol the new routes, even though they have made it clear that they are not trained for this type of special duty. That many of these children are poor black children trapped in under-resourced schools appears irrelevant to a mayor who takes his lead from politicians such as Barack Obama and Arnie Duncan, two educators who have simply reproduced the Bush educational reform playbook, i.e., more testing, demonize teachers, weaken unions, advocate for choice and charter schools, and turn public schools over to corporate hedge-fund managers and billionaires such as Bill Gates. Emanuel’s passionate zeal to downsize schools in impoverished black neighborhoods is matched only by his misdirected enthusiasm to lay out $195 million “on a basketball arena for DePaul University, a private Chicago university.” 3.
Having despised Emmanuel as the Obama Chief of Staff, I find it hard to believe that he is even worse than I imagined……but he is.
Now It’s Time to Talk About Chicago’s Tale of Two Cities
1/27/14
http://prospect.org/article/now-it’s-time-talk-about-chicago’s-tale-two-cities
Excerpt:
Rahm Emanuel has a favorite four-letter word for members of the labor movement. When Emanuel was White House chief of staff, he was told that tens of thousands of autoworkers could lose their jobs if General Motors and Chrysler didn’t receive a federal bailout. His response: “Fuck the UAW.” As mayor of Chicago, Emanuel became so enraged during negotiations with Karen Lewis, president of the Chicago Teachers’ Union, that he shouted “Fuck you, Lewis.” (The teachers went on strike for seven days, claiming Emanuel had “disrespected” them, as well as tried to force them to work longer hours after reneging on a promised pay raise.)
Few political figures contributed more to the Democrats’ realignment from a party of working people to a party of Wall Street than Emanuel. The New Democrats of the 1990s responded to the weakness of the labor movement by shifting their donor base from unions to socially liberal financiers. Emanuel was Bill Clinton’s point man on shepherding the North American Free Trade Agreement through Congress. After leaving the White House, he earned $16 million in a two-and-a-half year career as an investment banker. In 2006, as chairman of the Democratic Congressional Campaign Committee, he helped the party win control of the House of Representatives by recruiting anti-abortion, anti-gun control Democrats in swing districts.
When Michael Bloomberg announced he would retire after twelve years in charge of New York City, it looked as though Emanuel would take his place as the nation’s pre-eminent mayor. Then came Bill de Blasio, whose campaign slogan—that New York has become “two cities,” one for the wealthy and one for the poor—was a repudiation of the governing style shared by both Bloomberg and Emanuel. By campaigning as the candidate of the 99 percent, de Blasio not only ensured he would step out of his successor’s shadow, he set himself up as Emanuel’s rival in influencing Democratic politics. De Blasio was sworn in by Emanuel’s old patron, Bill Clinton. Also on hand was Hillary, who may be forced to repudiate Clintonomics if she wants to win the presidential nomination of a party taking up the cause of those on the wrong side of an economic divide widened by the Great Recession.
Ain’t that the truth, Mike.
http://www.nbcchicago.com/blogs/ward-room/Rahm-progress-report-hows-he-doing-as-chicago-mayor-282147411.html“Rahm Emanuel will be up for referendum in February when Chicagoans get the chance to hand the mayor a second term—or kick him to the curb.
Emanuel’s stint at City Hall has been characterized by controversy, from uproar over school closures in underserved neighborhoods to eyebrow-raising crime stats to ego-bruising polls forecasting his political death.
With three months until Election Day, and two progressive rivals (2nd Ward Ald. Bob Fioretti and Cook County Commissioner Jesus “Chuy” Garcia) angling for his job, Emanuel will soon launch the biggest campaign of his political career and one that requires the blunt-speaking politician to soften his public image while attempting to win back constituents who’ve come to view him as too radioactive, too removed from the average voter to effectively govern a city deeply divided along racial and economic lines.” Disclosure, one of my sisters dated Bob Fioretti for a while. lol