Kaplan, community members discuss city’s bond debt deal with Goldman Sachs
on April 5, 2012
Rebecca Kaplan was once a rabbinical student, and the Oakland City Councilmember still knows her scripture well. On Wednesday afternoon, Kaplan quoted the books of Isaiah, Leviticus and Exodus while speaking during a teach-in about the city’s bond debt with Goldman Sachs at Allen Temple Baptist Church in East Oakland.
In 1997, Oakland and the investment bank Goldman Sachs agreed to a rate-swap deal relating to $187 million in city debt. The deal allowed the city to convert floating interest rates on the debt into a fixed rate of 5.6 percent. But what appeared to be a good deal at the time has proved costly in the long run, after the market collapsed in 2008 and interest rates dropped to below 2 percent. The city has come out on the short end of the deal, and has already paid out $26 million more than it owed and is currently paying $5 million annually.
The deal has upset many in the city because when the market crashed in 2008, big banks like Goldman Sachs were bailed out with billions in taxpayer money, but now that Oakland is in dire financial straights, the bank hasn’t agreed to renegotiate the terms of the deal to give the city some relief. As a result, Kaplan said, there is “less money for public services” because money is being paid towards Goldman Sachs.
“As it says in Leviticus, chapter 25, verse 6, ‘If your kinsman being in straights comes under your authority, let him live by your side. Do not extract from him usery through interest,” Kaplan said to a group of about 75 people sitting in folding chairs in an auditorium at the church.
“Do not lend upon usery,” Kaplan continued, to calls of “Yeah!” from the crowd. “Do not lend upon usery. That means do not charge unjust interest. ‘Do not charge unjust interest’ is in here 4,000 years ago. People were worrying about unjust interest and it is still an issue today.”
Kaplan has called the deal a “toxic asset” for the city, and last June, wrote a letter to Goldman Sachs CEO Lloyd Blankfein asking to renegotiate the deal because companies like Goldman Sachs have a responsibility to “operate in a manner that would be beneficial to the public” after using “taxpayer dollars in order to salvage private, for-profit corporations.”
The union that represents city workers, SEIU 1021, began researching the deal at around that same time. By October, a coalition that includes community groups like Block by Block Organizing Networks, Oakland Community Organizations, Occupy/Decolonize the Hood and Allen Temple Baptist Church began meeting on Saturday afternoons to discuss the deal, and what the city can do to get out of it.
More recently, dozens of members of the coalition showed up at the February 21city council meeting, demanding the city reach a deal with Goldman that would repay all the money it has paid since 2005, when the city paid back its initial debt to Goldman.
“If Oakland has $5 million a year to throw into hole that is Goldman Sachs’ pocket, let’s use that money to build a clinic out in East Oakland, do job programs in West Oakland,” Reverend Daniel Buford of Allen Temple told the city council at the time. “Let’s use that money for some constructive purpose, rather than to line the pockets of Goldman Sachs.”
Members of the coalition and the church attended Wednesday’s teach-in to discuss the swap and learn about just what it means. Kaplan was introduced by Buford, who called her “Rabbi Rebecca Kaplan.” Kaplan said this week—the Jewish holiday of Passover—is a time to share “stories of liberation from oppression.” She said they are important “in this particular moment to let Goldman Sachs know they can’t keep oppressing us, they can’t keep stealing our wealth.”
“They can’t keep stealing our labor and holding us hostage to their clout and their financial and political power,” she said continued, while encouraging the audience to pressure the city council and Goldman Sachs to renegotiate the deal.
The city council’s finance committee will also discuss the deal, including how the city might be able to get out of it, at its April 24 meeting. In an interview after her talk, Kaplan said that city staff has been meeting with Goldman officials about the options the city has. Kaplan said applying public pressure on Goldman Sachs to renegotiate the deal has a “decent chance of succeeding.”
“There is a history where public outcry has at times succeeding in changing the behavior of large corporations,” Kaplan said. “It’s not a guarantee, but it certainly can. Certainly I’m hopeful that can happen here.”
Members of the Oakland Coalition for Social and Economic Justice plan to be present at that meeting as well to encourage the city to get out of the deal. Millie Cleveland, an attendee of Wednesday’s teach in who is a member of SEIU 1021 and the coalition, said the coalition has already had an effect on the council.
“We showed the council the public was aware [of the rate-swap deal] and forced them to put it on the agenda,” Cleveland said. “We put the council on notice that it has to show some leadership and find a way to get out of this deal.”
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