(Interesting and generating some comments – promoted by Danny the Red (hair))
Got the press release below forwarded to me by a friend who covers finance stories on a national desk and this just a couple days after an SEIU newsletter about “interest rate swaps.” Reading between the lines and taken along with the NY Times article and the recent SEIU newsletter, there are some very serious questions that need answers. These Swaps are exactly what has sent Greece to the brink and are costing cities and states across the nation millions they already can’t afford to be losing.
Are banks like JP Morgan rolling in extra profits from Swap transactions at the cost of DPS students, teachers and retired DPS teachers counting on their pensions?
Just what kind of financial wizardry did Bennet and Boasberg do with DPS’ funds and what is the condition of the teachers’ pension fund? What if any impact does it have on PERA after that merger? Has the DPS School board been kept fully apprised of the financial condition of the district, the pension funds and any losses they’re eating after their current and former resident financial geniuses got them into this deal? Do the teachers know?
Who advised DPS on these transactions & what kind of fees were they paid?
It’s not just the potentially escalating losses to DPS, but as was reported in an article ( http://trujilloenterprises.com… ) about swaps plaguing New Mexico, it means if any of the banks involved goes under, the value plummets.
Here’s how a newsletter from SEIU described these “Swaps”:
Sunday’s New York Times ran an article blowing the lid off a Wall Street scheme called “interest rate swaps” that are sucking money from cities and states across the country. The swap deals were originally sold to communities as a way to shield against unpredictable interest rates. But, when the banks crashed the economy, the rules of the game changed.
Now, all these swap deals are doing is generating pure profit for the big banks – and it’s being paid for with our tax dollars.
Help stop the swaps. Demand a public investigation into these shady deals: http://action.seiu.org/stopthe…
These swaps deals amount to the biggest Wall Street bailout you’ve never heard of – around $28 billion nationwide. The city of Oakland, CA alone is paying $5.2 million annually for a swap deal with Goldman Sachs. That’s enough to completely resolve the city’s outstanding budget gap – and avoid cuts to critical services. Instead, it’s being used to fill Goldman’s profit pool, while city services go on the chopping block.
Help expose swap deals in your community; demand an investigation: http://action.seiu.org/stopthe…
Taxpayers have already given enough to bailout Wall Street. But that hasn’t stopped them from taking more. With communities feeling the squeeze in a tough economy, the last thing we can afford to do is send billions of our local tax dollars to Wall Street.
Click here to contact your attorney general and demand a public investigation into interest rate swaps: http://action.seiu.org/stopthe…
Press release sent out today:
DENVER SCHOOL BOARD MEMBERS CALL FOR TRANSPARENCY IN DISTRICT’S INTEREST-RATE SWAPS
News Advisory – March 11, 2010
DENVER, CO. On Sunday, March 7, 2010, The New York Times published an article entitled “The Swaps That Swallowed Your Town,” about interest rate swaps and their effect on school districts and municipalities. The article is available here http://www.nytimes.com/2010/03… .
In short, the story reports on the dramatic effect interest rate swaps are having on the budgets of public institutions and their ability to provide the services we expect from them. It also details the extent to which financial institutions took advantage of public officials and taxpayers in these transactions. Based on our preliminary research, we believe Denver Public Schools is being adversely affected by this kind of deal.
In 2007 DPS began to address pension-related issues and made a decision to raise $750 million for two primary purposes:
* To refinance pension certificates of participation from bonds issue in prior years, so as to redirect more money into the classroom
* To fully fund the DPS retirement system in anticipation of a merger between the DPS teachers retirement system and PERA, the Colorado retirement system.
DPS entered into negotiations with JP Morgan and CitiGroup, agreeing to issue fixed-rate bonds secured by DPS school buildings and other properties. DPS then began discussion to enter into an interest-rate swap agreement with JP Morgan, Bank of America and the Royal Bank of Canada. We believe that following ensued: DPS entered into a swap transaction, believing that interest rates would stay high. As recent financial news tells us, interest rates fell. We are concerned that this may have translated to a loss of taxpayer dollars.
The Times article specifically cites two major concerns with these types of transactions: a lack of understanding on the part of the public institutions and lack of transparency in the transaction as a whole. Because of our fiduciary responsibilities, we ask for a public accounting of these matters.
We, the Board Members of the Denver Public Schools listed below, believe we have a duty to the children and employees of our district, as well as to the taxpayers to make certain that all the facts concerning these transactions are made clear to the public.
Vice President,Director, District 5
Denver Board of Education
Secretary,Director, District 3
Denver Board of Education
Director, District 2
Denver Board of Education