Even before leading the world economy to the brink of collapse in 2008, big banks haven’t exactly been popular. Since then, several got bailout money from the U.S. taxpayer and still paid ridiculous bonuses to execs. Lately, they’re earning record profits even as they stifle growth with tight credit to consumers and businesses.
Recent news has been even worse for a handful of banks. Headlines fly by like JP Morgan Chase losing billions in risky trading, British Barclay bank manipulating loan rates, and now, Goldman Sachs getting a vote of no-confidence from the Oakland City Council.
The council voted unanimously Tuesday night to boycott Goldman Sachs unless they agree to cancel an investment deal that will cost Oakland nearly $4 million this year. The vote comes after the council received significant pressure from unions and community leaders trying to get them to support their cause.
Luz Calvo of the Coalition to Stop Goldman Sachs praised the decision:
“Tonight was a huge victory both for the City of Oakland and for people throughout the world living under the boot of interest rate swaps.”
The City of Oakland entered into an agreement in 1998 that shielded them from interest rate hikes on city bonds they issued to pay pensions. Since then, though, interest rates have remained at historically-low levels, and the city has been paying a fixed rate higher than what the bank pays back to the city.
And Oakland isn’t the only public entity dealing with this kind of situation. Investment banks are siphoning about $2.5 billion dollars from U.S. taxpayers in this way. Technically, it’s completely legal, but still seems slimy and unfair.
Unfortunately, no one seems to be entirely sure yet whether the City of Oakland actually can cut themselves off from Goldman Sachs. Though the city continues to discuss the matter with the bank, the fate of the agreement probably lays in the hands of Goldman execs.
And I hate to break it to you, but big banks aren’t exactly known for their generosity.