Occupy the Hood, Decolonize Oakland, SEIU Local 1021, Oakland Community Organizations (OCO) and Oakland clergy packed the city council’s chambers on Tuesday evening (Feb 21) to demand an end to the city’s “toxic deal” with Goldman Sachs. They are referring to debt payments that the city of Oakland makes to the speculative banking corporation every year, which have totaled $26 million since the late nineties and potentially over $2 million more per year until 2021. Coincidentally, that is the exact same amount that would be required to keep open the 5 schools slated for closure.
Goldman Sachs’ colossal gambling addiction played a central role in crashing the global economy in 2008, but rather than receiving any type of retribution, they have instead received multiBILLION dollar bailouts of public money. This government welfare subsized the $4+ billion in private profit they made last year, and the $40+ million they paid their CEO alone. Meanwhile, the city of Oakland and municipalities across the country received no bailouts and have been passing worse and worse austerity budgets each year.
As Goldman Sachs receives free support in the form of taxpayer money (TARP) and an essentially open spigot of no-interest loans from the Federal Reserve, Oakland has been paying a fixed 5.6% interest to them for debt in which the principal has already been paid, activists say. The East Bay Express breaks it down:
“The toxic rate-swap agreement in question dates to 1997 when Goldman Sachs convinced Oakland officials that it would protect taxpayers against the possibility that interest rates would rise on variable rate bonds that the city planned to issue the next year. Rate swaps — essentially contracts between two parties — allow governments to transform variable-rate debt payments into fixed-rate debt. Oakland’s deal with Goldman Sachs converted floating rates on $187 million of bond debt into a fixed 5.6 percent.”
“The problem for Oakland, however, was that floating interest rates only briefly exceeded 5.6 percent in the past fifteen years; first between 1998 and 2001, and again at the height of the housing bubble between 2006 and 2008. During the economic recession that followed 9/11, interest rates plummeted below 2 percent, forcing Oakland to make much higher payments to Goldman Sachs than it would have had it never signed the deal. Then, with the collapse of the economy in 2008, the US Federal Reserve reduced its lending rates to virtually zero, with variable rates in markets trailing close behind. Yet Oakland was still stuck paying more than 5 percent.”
Decolonizers brought the heat to the council during a lengthy open comment session, each speaker’s words multiplied by the signs and cheering behind them. Luz Calvo, an ethnic studies professor at Cal State East Bay, quoted a famous saying, “‘Give a man a gun and he can rob a bank. Give him a bank and he can rob the world.’ That is exactly what is happening,” she said. “Every politician always says they’re tough on crime. Now it’s time to go after the REAL criminals.” Another speaker pointed out that Los Angeles and San Francisco have already set precedents for nullifying some of their debt payments.
Councilmember Libby Schaff responded by saying that this issue will be “agendaized” at a future meeting. “We’ve already asked for the termination fee to be waived,” she said. To that someone shouted, “Don’t ask, demand it!” And she corrected herself to “demand.”
This would be an important victory because 1) it would recuperate millions of taxpayer dollars per year for the people of Oakland, and 2) it would free the city from the snare of megabank debt servitude. Thirdly, the victory itself would show that the 99% can win, giving the movement momentum toward bigger goals, such as addressing the structural crisis of Oakland’s budget, which soon leads us to the structural crises of our whole economy and the need for re-imagining our economic systems.
We need to see this policy demand to end debt repayments as part of a larger arc in decolonization, which means both autonomy from the 1% and creating a system beyond our current one that provides for the basic human needs of all people.
4am notes 