Whereas, the City of Los Angeles entered into an interest rate swap deal in 2006 with the Bank of New York Mellon and the Dexia Group to reduce the borrowing costs for the wastewater systems bonds, which has already produced windfall profits of $72 million for the Bank of New York Mellon and the Dexia Group at the expense of Los Angeles taxpayers, which, if continued unchanged, could cost Los Angeles taxpayers more than $80 million over the next fourteen years;
Whereas, the said interest rate swap deal soured in 2008 during the Great Recession, as the economy was crashed by irresponsible and illegal practices of Wall Street banks, including the Bank of New York Mellon and the Dexia Group; the Great Recession caused the Federal Reserve to cut interest rates to near zero; these events changed the basis under which the interest rate swap deal was made, making the rates under the deal excessive by current standards; and questions have arisen on whether the banks negotiated in good faith with the City and properly disclosed potential risks of the interest rate swap deal;
Whereas, it is in the interest of the City of Los Angeles to renegotiate the rates of the interest rate swap deal to save taxpayers millions of dollars that the City of Los Angeles could use to rebuild its crumbling infrastructure, to protect good quality public sector jobs, to safeguard public employee pensions, and to provide vital City services;
Therefore be it resolved, that the Los Angeles County Democratic Party supports the Los Angeles City Council’s action in holding Wall Street banks accountable and in calling on the Bank of New York Mellon and the Dexia Group to renegotiate or terminate the interest rate swap deals associated with the wastewater system bonds with no additional fees, and calls on the Bank of New York Mellon and the Dexia Group to return the unfair profits and termination payments they have received since 2008 at an estimated total of up to $72 million;
Be it further resolved, that the Los Angeles County Democratic Party calls on Los Angeles Mayor Eric Garcetti, Los Angeles City Attorney Mike Feuer, and Los Angeles City Controller Ron Galperin to uphold the principle of good faith and fair dealing on behalf of Los Angeles taxpayers by taking swift and decisive action to recuperate the tens of millions of taxpayers’ dollars from Wall Street banks, including but not limited to negotiating with the Bank of New York Mellon and the Dexia Group and filing a statement of claim with the Financial Industry Regulatory Authority.
Bobbie Jean Anderson, LACDP Vice Chair, AD 59