Los Angeles Municipal Fraud, The Next Battle Against Wall Street?
By Tom Hayden
Global Research
May 10, 2014
The next battle against Wall Street may be brewing and this one is in Los Angeles City Hall.
If it erupts, the soldiers will be a scrappy, wonky, and sophisticated phalanx of labor, neighborhood, and religious activists. Their research has exposed the fact that Wall Street banks were paid $200 million in fees alone last year by the City of Los Angeles; many millions more than the city spent on fixing its streets.
The comparison between City Hall and our streets makes City Hall officials wince; claiming it mixes apples with oranges. But there’s more than catchiness in the comparison. The new report, Fix LA, shows that at least $106 billion in public money overall, from airports, seaports, utilities and pension funds, goes to private financial institutions that profit from fees, lending and leveraging those funds.
Citizens and elected officials often are overwhelmed and under-qualified to understand the weird and complicated transactions – debt swaps and derivative trades, for example – that Wall Street employs to extract maximum profit from all that public capital. There is no single Los Angeles official mandated to bargain with Wall Street. No official consumer watchdog, no fledgling Elizabeth Warren or Ralph Nader. No inspector-general to investigate financial industry fraud. No mainstream investigative reporters on the case, not so far anyway. While insiders and advocates will pore over the city’s multi-billion annual budget this month, no single monitor is minding the hundreds of millions funneled to Wall Street’s predatory care, as the report charges.
City officials will have their chance to respond in public hearings over the next several weeks, based on a motion being introduced by Councilman Paul Koretz this Friday; one seconded by Council member Gil Cedillo. Budget and Finance Committee chair Paul Krekorian, waiving the report, promised thorough public scrutiny of its data and claims.
Koretz is challenging the prevailing notion that the main role of local government is to cut its budgets for essential services, embrace austerity as inevitable, and pray that Wall Street investors notice. The city’s budget already has been cut 19 percent per capita since the Wall Street crash. The city paid out $133 million in taxpayer money last year alone to Wall Street firms for managing its pension funds.
While labor contracts are always “on the table” in budget talks, no one ever suggests that the city should put its Wall Street contracts “on the table” for cuts or renegotiation.
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