Feb 21, 2013 Comments Off on Violence prevention: Corporate charity or citizenship?
Last year, community groups called on Mayor Emanuel and the business community to match the fundraising they did for the NATO Summit to fund youth programs in the neighborhoods.
Now, under the glare of national publicity for Chicago’s ongoing epidemic of violence, Emanuel has decided to deploy his famous fundraising skills to gather $50 million in corporate donations for violence prevention programs over the next five years.
Certainly, every effort to bring resources to desperate communities is welcome. (And it’s churlish to point out that these folks raised nearly $50 million for NATO in a few weeks.) But is charity a substitute for good citizenship?
The Grassroots Collaborative is pointing out that Emanuel’s choice to co-chair the campaign heads a company that is profiting from controversial interest rate swaps that cost the city and the schools tens of millions of dollars a year.
Jim Reynolds is CEO of Loop Capital, which according to GC, has made $100 million in five interest rate swap deals with the city and CPS since 2005.
Interest rate swaps — also called “toxic rate swaps” by critics — are one of the wonderfully innovative financial products developed in the run-up to the financial crash a few years ago. They provide set interest rates to cover variable returns on public bond deals.
Cost Chicago $72 million a year
But since the crash, the Fed has kept interest rates near zero, while local governments are locked into interest rates of 3 to 6 percent. That costs Chicago $72 million a year; CPS loses $35 million a year on the deals, according to GC. (CTU has protested this arrangement.)
While applauding their “charity work,” GC notes, “Chicago business leader must address their role in creating the lack of resources for youth and communities in the first place. They must stop gouging taxpayers and renegotiate these toxic deals.”