CHICAGO – U.S. Sen. Bernie Sanders on Saturday said Chicago Mayor Rahm Emanuel is caving into Wall Street bankers and making students pay the price by slashing Chicago public school budgets.
Emanuel already has closed 50 public schools and is threatening to close more, lay off more teachers and cut their pay because of a $480 million budget shortfall. Meanwhile, the city has continued to pay bankers who lured the school system into a risky investment in an exotic debt-financing scheme.
“The city of Chicago should sue these banks for fraud and put public pressure on these wealthy bankers to protect Chicago’s most precious asset – its children,” Sanders said at a news conference three days before Illinois voters go to the polls in a primary election.
“The reality is that there wouldn’t be a budget shortfall if the city of Chicago had refused to pay Wall Street banks like Goldman Sachs and Bank of America over $500 million for risky financial schemes that were marketed as a way to finance the public school system,” Sanders added.
The budget crisis was caused by switching from traditional fixed-rate bonds to the high-risk securities, according to a Chicago Tribune investigation. “This is a disaster for communities in Chicago, for communities of color and for the children of this city,” Sanders said.
Illinois Gov. Bruce Rauner has put the state in a similar bind. In the midst of a state government higher education budget crisis, the governor “forgot to tell the people of Illinois that the state is paying big banks for these ‘toxic swaps’ too,” Sanders said.
Unlike Chicago, other cities – including Houston, San Francisco, Philadelphia and Detroit – took legal action or threatened to sue unless their bankers agreed to forego profits on similar so-called toxic swaps. “Not Chicago,” Sanders said. “This city just gave the banks what they asked for and now they want to make the teachers and schoolchildren of Chicago pay the price.”
As president, Sanders added, he would take on Wall Street. “My Justice Department will go after these Wall Street vultures. Their days of looting local communities and state governments will be over.”
Sanders also noted that Hillary Clinton, his rival for the Democratic Party nomination for president, has close ties to the Chicago mayor and boasts about Emanuel’s endorsement of her. “Let me be as clear as I can be,” Sanders said at the news conference. “Based on his disastrous record as mayor of the City of Chicago, I do not want Mayor Emanuel’s endorsement if I win the nomination. We do not want the support of people who are indebted to Wall Street and big money interests.”