School Parents Visit Financial Institution to Demand End to “Toxic Swaps” Ripping off Millions from Public Schools
A delegation of local school council leaders, students and supporters from Pilsen and other communities paid a visit to Jim Reynolds, president and CEO of Loop Capital Markets LLC, to demand the renegotiation of its company’s portion of “toxic swaps” costing Chicago Public Schools and the City of Chicago $72 million a year. “Toxic swaps” cost public schools almost $36 million every year at a time of record school closures and further reduction of individual school budgets.
“The children in my school can’t even get a decent place to play, why should companies like Loop Capital be getting the money that belongs to our kids?” said Rosemarie Sierra, Local School Council President at Pilsen Community Academy. “Taking money from neighborhood children to give it to bankers is wrong. This deal has to stop.”
The largest school closing in US history a few weeks ago in Chicago is being topped off by budget cuts to individual schools of up to 25 percent. In Pilsen alone, Jungman Elementary, for instance, lost 25 percent of its budgets, $535,000, resulting in almost seven fewer teachers, school officials said. This will mean that class sizes will go from 20 students to 30 students, according to the school administration. While CPS refuses to provide a complete picture of the budget cuts, the shortages reported in 100 schools so far amount to $70 million, according to Raise Your Hand Illinois.
Meanwhile, the city pays out $72 million dollars a year to cover losses in “toxic swap” deals, according to research by the Grassroots Collaborative. Interest rate swaps or toxic swaps are highly speculative financial instruments entered between banks such as Loop Capital, Chase Bank, and Bank of America, and CPS and other City of Chicago departments. Chicago Public Schools pays $35.7 million a year due to these toxic deals to companies like Loop Capital. In one year alone, Loop Capital made $20 million off of these deals. From five deals with the City of Chicago and CPS starting in 2005 through 2011, Loop Capital has made $100 million in profits to date.
“What kind of a mayor tries to balance the budget on the back of public school children while letting bankers make millions off of public schools?” said Rosalie Mancera, a Pilsen resident. “We cannot let them get away with this shameful attack on working communities in benefit of the 1 percent”.
And it is not only in Chicago that Loop Capital is profiting off the public sector. In Philadelphia, advocates for publicly owned utilities are fighting against the privatization of the Philadelphia Gas Works by Loop Capital and JP Morgan.
Pilsen Alliance is a grassroots community organization started in 1998 in Pilsen. Pilsen Alliance is a membership organization working on any issue of concern in the community. Most recently, the organization has helped put an end to coal pollution in Pilsen and keep all Pilsen schools safe from closure.