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Big banks like Chase have repeatedly targeted communities, taxpayers, and even our schools with predatory debt. It's time to fight back.
Chicago’s school year kicked off amid a looming budget crisis that jeopardizes stability for both students and teachers. At the heart of the issue is a silent killer of public education: predatory bank loans, particularly from JPMorgan Chase.
During a bargaining session with the Chicago Teachers Union (CTU), I urged Chicago Public Schools (CPS) to stop allowing big banks to hold Chicago students hostage. Instead of delaying contract negotiations with teachers and risking program cuts that harm students, CPS and state officials should take legal action to recover the funds lost due to these toxic bank deals.
CPS has a deficit projection of over half a billion dollars, perpetuated by the several hundred million dollars in predatory loans from banks like JPMorgan Chase taken out nearly a decade ago. These loans have strangled CPS finances and prevented the district from providing the high-quality education Chicago's children deserve.
Predatory loans are a familiar problem for families in Chicago and around the country. These risky loans are hawked as a short-term solution to fill a gap in finances–with a steep interest rate buried in the fine print that balloons over time.
Chicago Public Schools should hold banks like Chase accountable for the harm they’ve caused Chicago’s schoolchildren.
Chase has repeatedly targeted communities, taxpayers, and even our schools with predatory debt. Chase and its predecessor banks pushed Black and brown Chicagoans into the predatory subprime mortgages that caused the 2008 financial crisis, leading to a tsunami of foreclosures that resulted in a massive loss of household wealth in communities of color.
And nearly 10 years ago, Chase closed a predatory deal with CPS that has haunted our finances ever since.
CPS was already reeling from drastic cuts to special education services in 2016, prompted by the immediate payment of $234 million in termination fees for bad deals they entered into a decade prior. An unfair school funding formula forced 50 schools to shutter three years earlier and continued to destabilize the same South and West side neighborhoods.
A twin set of threats were on the horizon: a potential takeover of schools by Governor Bruce Rauner, a Republican who was hellbent on making Illinois more like Texas, and a threat by Mayor Rahm Emanuel to lay off 6,000 teachers to close a budget gap caused by structural underfunding.
The school district desperately needed funds to pay for projects like lead abatement. Rather than face a takeover or mass layoffs, they decided to issue bonds in order to pay the termination fee. But because CPS’s credit rating had been downgraded to “junk” just a few months prior, financial giants like Chase and Nuveen exploited the opportunity.
Banks purchased the bonds from CPS at a lowball price but then sold them to other investors just months later for a much higher payoff. Over a span of two months, Chase bank made a 9.5% profit on $150 million in bonds through this arbitrage scheme, an annualized profit of 82%. This calls into question whether Chase met its legal obligation to give CPS a fair price for the bonds. Our schools are still impacted by these bad deals, paying $200 million annually for loans taken out during this moment of crisis.
CPS was also the victim of toxic interest rate swaps deals that cost the district, Chicago, and the state of Illinois hundreds of millions of dollars in the early 2000s. Banks had marketed swaps as a way for cash-strapped governments to save money, but they were laden with hidden risks that materialized as a result of the 2008 financial crisis, causing payments to skyrocket and costing taxpayers a fortune.
As with Chicago’s parking meter and Skyway deals, future generations of taxpayers were stuck holding the bag. From 2012 to 2016, the City of Chicago handed over $145 million to Chase Bank alone to terminate these toxic swaps.
CPS should hold banks like Chase accountable for the harm they’ve caused Chicago’s schoolchildren. There is strong reason to believe the banks that trapped CPS into these predatory deals violated their legal responsibilities to the district. While the district has improved its financial health since 2016, recovering the millions lost to predatory lending would help build on their progress.
Decades of underfunding and predatory banking have swallowed the district’s reserves. Now, faced with a federal reduction that could slash funding by $800 per student, the district has reached an inflection point: Will CPS hold banks accountable and fund the programs, resources, and staff that students deserve—or will they make cuts that set kids back?
"If we're going to take back the Democratic majority," said historian Harvey J. Kaye, "we're going to have to take back the people who literally abandoned the party because they felt abandoned."
On the eve of the Democratic National Convention, progressive organizers, scholars, and policymakers gathered in Chicago to discuss what matters most to working-class people across the United States and how to pressure elected Democrats to embrace and enact bold solutions.
The two-day event—billed as Progressive Central 2024: The Politics Americans Want and organized by Progressive Democrats of America (PDA) in coordination with the Arab-American Institute, The Nation, and Rainbow PUSH Coalition—was held at the Chicago Teachers Union (CTU) building, just blocks away from the United Center, where the DNC is being held this week.
"The Chicago Teachers Union is supposed to be the anchor, the destination place for progressives from across the world," said CTU president Stacy Davis Gates, whose members are months into negotiations for a new contract. "We're doing the best we can to be a beacon. And what we want to do is call the rest of the progressive movement in to say, help protect this, help anchor this, help grow it, help refine it."
The progressive conference is part of a two-decade tradition, going back to the 2004 convention, PDA communications director Mike Hersh told Common Dreams as the event wrapped up Monday, while anti-genocide protesters marched nearby outside the kickoff of the DNC, where speakers included United Auto Workers president Shawn Fain and Congresswoman Alexandria Ocasio-Cortez (D-N.Y.).
"I think lot of the energy that progressives have today is because they feel for the first time in a long time that the party has a chance to move more in lockstep with what we want to see."
"This was vintage Progressive Democrats of America," Hersh said of this year's conference. "We try to mobilize people and that's really what all of these Progressive Central events have been about."
The livestreamed conference featured panels, pre-recorded videos, and speeches on a range of key issues, including: building progressive power, the climate emergency, the crisis of American democracy, an Economic Bill of Rights, immigration reform, Medicare for All, organized labor, reproductive freedom, the Rural New Deal, structural racism, foreign policy—particularly U.S. government support for Israel's assault on the Gaza Strip—and more.
Collin Rees of Oil Change U.S. and Food and Water Action's Michelle Allen stressed the need to phase out fossil fuels and combat false climate solutions, while One Fair Wage president Saru Jayaraman and Sara Nelson from the Association of Flight Attendants-CWA delivered remarks—and a rendition of "Solidarity Forever."
"Using power builds power, and we will use our power," Nelson said. "We are not just about access politics in this room. We are about using power to make our world better for the people."
William Walter, who is part of Young PDA, Our Wisconsin Revolution's leader, and a Democratic candidate for his state Assembly, explained that "our initial approach was, 'What would it look like if we held a progressive national convention akin to the DNC or RNC, but devoted to progressive policies, progressive issues, progressive legislation?'"
Reflecting on her experience attending the event, Beaei Pardo, executive director of Code? Whatever!, told Common Dreams that the event "maps the body of honest ideas, systemic nurturing for self-determination, stories that help us 'get it' about what matters for good life, pragmatic history, theory we can test, and a ready community unafraid to consider the possibilities of our humanity."
India Walton of RootsAction speaks at Progressive Central in Chicago on August 19, 2024. (Photo: Young PDA steering committee member Tyler C. Rivera)
The programming offered visions of how the Democratic nominee, Vice President Kamala Harris, and her running mate, Minnesota Gov. Tim Walz—coupled with a Democrat-controlled Congress—could tackle these topics, and how to compel them to do so.
"Right now in the United States, there are four prohibitive costs that you experience across life that block young people entering into the economy from having a successful and comfortable economic life readily available to them," PDA executive director Alan Minksy said just before the event began. They are the costs of having a child, education, healthcare, and housing.
"You're not going to be a successful administration if you don't address these things, and the mainstream of Democratic policy is going to fail to produce the kind of society that Americans want to live in," Minsky warned. "We have to be adamant about how we have the solutions to this stuff... Not just maintenance of our democracy, but actually reinvigoration of our democracy."
He added that "one would have to be naïve to believe that an incoming Democratic administration's ready to go against all the power and money and wealth... on the right wing of the party and by the Republicans, but we have to make them see that that's the way to create the society that Americans want to live in."
Over the past few years, Minsky has joined historian Harvey J. Kaye, professor emeritus at the University of Wisconsin - Green Bay, in arguing that progressive groups and unions should create a grand coalition that will press the Democratic Party to advance a 21st Century Economic Bill of Rights, a focus of one of the Sunday presentations.
As Kaye spoke, a screen above him displayed a clip of a comic that he and Matt "The Letterhack" Strackbein published in Common Dreams, tracing the idea back to former President Franklin D. Roosevelt's State of the Union speech 80 years ago, and the 10 proposed rights:
In terms of actually pursuing policies in line with the Economic Bill of Rights, Kaye told Common DreamsTuesday, "it's too late for this particular convention, but... it's not too late for a Harris presidency."
The proposal—which polling shows would be popular with the American public—could even motivate voters to support Harris and Walz, who are working to defeat Republican former President Donald Trump and Sen. JD Vance (R-Ohio) in November.
"Just imagine if Tim Walz... just one of them got up and said... 'Our ambition is to redeem the legacy of FDR in favor of an Economic Bill of Rights,'" Kaye said. "You can just lay them out and then start talking about it in policy terms if you wish. In other words, if we're going to take back the Democratic majority, we're going to have to take back the people who literally abandoned the party because they felt abandoned."
While some local and state candidates have in recent years embraced and even run on an Economic Bill of Rights, a starting point for promoting related legislation at the federal level, Kaye noted, is to "get into a couple of congressional folks' minds."
Members of Congress who spoke at Progressive Central included Sen. Bernie Sanders (I-Vt.), who declared Monday—ahead of his Tuesday DNC address—that "the American people want us to take on the greed of the oligarchy."
There were also video messages from a few Democrats as well as appearances by Reps. Danny Davis (D-Ill.), Maxwell Frost (D-Fla.), Jesús "Chuy" García (D-Ill.), Jonathan Jackson (D-Ill.), Pramila Jayapal (D-Wash.), Ro Khanna (D-Calif.), Barbara Lee (D-Calif.), Jim McGovern (D-Mass.), and Delia Ramirez (D-Ill.).
Khanna—who mentioned FDR's Economic Bill of Rights in his 2022 book and was part of the same Sunday session as Kaye—told the audience that "the secrets of America's future are in our history" and "we need ideas that move people."
U.S. Rep. Pramila Jayapal (D-Wash.) joins Sen. Bernie Sanders (I-Vt.) at Progressive Central in Chicago on August 19, 2024. (Photo: Young PDA steering committee member Tyler C. Rivera)
One of those ultra-popular ideas is Medicare for All, which Jayapal discussed during a Sunday panel. The popularity of universal healthcare presents an opportunity for "a great organizing moment," she acknowledged, sharing her hopes to coordinate the reintroduction of the Medicare for All Act with related local and state measures.
While Jayapal and Sanders' bill envisions a full transformation of the U.S. healthcare system, she told Common Dreams that "we're going to try to start to get there by some expansions and modifications to Medicare—so expanding Medicare to include dental, vision, and hearing... That will be a big priority."
"Reducing the Medicare eligibility age to at least 60 will be a big priority," the Congressional Progressive Caucus chair added. "Continuing to expand the number of prescription drugs that are negotiated will be a big priority. And then getting rid of what I call the 'Medicare Disadvantage' plans that are trying to privatize Medicare."
Enacting the healthcare reforms that Jayapal outlined will require expanding the Democratic majority in the Senate and reclaiming the House of Representatives—where progressives who have supported a call to end Israel's assault on Gaza are under sustained attack. This summer, Reps. Jamaal Bowman (D-N.Y.) and Cori Bush (D-Mo.) lost their primaries to Democrats backed by the American Israel Public Affairs Committee (AIPAC) and rich Republican donors.
"We need Bowman in the Congress. We need Bush in the Congress," Nina Turner—who was targeted by dark money during her 2021 Democratic primary run to fill a vacant seat in Ohio—told the crowd. "But we left them on the side of the road."
Turner also challenged Democrats who have spent this election cycle raising the alarm about Project 2025—which includes a sweeping far-right policy agenda written by Trump allies—by urging the party to put forward its vision for transforming the nation in a positive direction. "Where's their Project 2025?" she asked, asserting that the best way to win voters is "by having policies of your own."
Sara Nelson of the Association of Flight Attendants-CWA, One Fair Wage president Saru Jayaraman, and former congressional candidate Nina Turner particpate in a labor panel at Progressive Central in Chicago on August 19, 2024. (Photo: Young PDA steering committee member Tyler C. Rivera)
Since taking the torch from President Joe Biden last month, Harris has started sharing a policy message that includes an economic agenda to boost access to affordable housing, lower medical costs, and assist families raising young children.
"The economic framework that the vice president and her running mate have come out with so far is really a good start," Turner told Common Dreams, noting the need for progress on issues including calls for a cease-fire and arms embargo regarding Gaza. "It's obvious that there are components of the progressive movement who are excited about the change from Biden to Harris-Walz, but also don't let that excitement delude Democrats into thinking they're just going to get a free ride."
"We're in a sugar high right now. That's how I'm going to describe it. We could come crashing down if they're not careful," she warned. "They're going to have to do the work, hear the cries or the concerns of the very voters that they're trying to touch, and communicate with those voters in a way that says, 'We hear you and we see your pain.'"
"Just talk to people about healthcare. Just talk to people about the cost of living. They want relief. And I think they will support anybody that legitimately is going to give them that relief," she added, urging Harris and Walz to "shake off neoliberalism, shake off incrementalism, and go full throttle for the working class."
Harris' selection of Walz as her vice presidential candidate has been cheered by progressive political leaders and groups, in part because of the historic legislative progress that Minnesota's Democratic-Farmer-Labor Party made under this leadership last year.
During a Monday panel, speakers from the state pushed back against the framing of it as a "Minnesota Miracle," stressing that the wins on school meals, labor protections, reproductive rights, and more were instead the result of years of organizing—an important lesson going into a potential Harris-Walz administration with a Democratic Congress.
Minister JaNaé Bates of Faith in Minnesota speaks at Progressive Central in Chicago on August 19, 2024. (Photo: Young PDA steering committee member Tyler C. Rivera)
Walter of Young PDA is among those welcoming Walz's rise, telling Common Dreams: "I think the Democratic Party has a tendency to shoot themselves in the foot when decisions are obvious. They overthink or overcomplicate things that really should not be overthought. Take the easy answer. Take the free space on the bingo card. It's right in front of you. You have a very popular governor, a Midwestern state, that has universal appeal that can take your message and present it easily in a way that most people resonate with. Just do it. And for the first time in a long time, the party did it. They just did it."
"I think a lot of the energy that progressives have today is because they feel for the first time in a long time that the party has a chance to move more in lockstep with what we want to see rather than deferring to their big corporate donors," Walter said. "Now, that's not to say they won't in the end because that's our job as organizers and as progressives, to continue to pressure them and to push them left, but I think we see a path forward."
Sam Rosenthal, the political director for RootsAction, similarly told Common Dreams after the conference that progressives across the country must continue to pressure the party.
"I think we're at a precarious moment for the progressive movement," he said. "In a lot of ways, we've achieved major victories in mainstreaming positions that, even five years ago, were considered fringe and too far left. The urgent need for environmental action, the fact that we're being price gouged by pharma companies, organized labor as a bedrock of national prosperity—all these things have become more or less mainstream in the Democratic Party, because of our efforts as progressives."
"At the same time, I fear that we risk losing our unique voice if we don't continue to agitate from the left, in coalition with the grassroots activists who form the base of the progressive movement," he continued. "There's a danger that, as our movement matures and grows, our positions will become harder to distinguish from Democratic Party orthodoxy, and I don't think we should let that happen. We have to continue to play our role in pushing the Democratic Party left, exactly because that strategy has been so successful so far."
"it is not that Chicago Public Schools does not have the funds. It's that Rahm Emanuel sold the school district to Jamie Dimon, JPMorgan Chase, and other bankers and left it broke on purpose."
The Chicago Teachers Union on Wednesday demanded a state investigation into a series of loan deals made with "predatory" Wall Street banks under ex-Mayor Rahm Emanuel and former Illinois Gov. Bruce Rauner that left the city's school system "broke on purpose."
"For years, banks scammed [Chicago Public Schools] with predatory financial deals, taking money out of our classrooms and shortchanging our students," CTU detailed in an online contract update. "For years, CPS and many other Illinois school districts have been systematically underfunded, burdened by bad bank deals, and forced to do more with less. We will need leadership from every level of government to transform our schools with the resources they deserve."
According to the Chicago Sun-Times: "During the financial crisis, stemming from the budget stalemate under... Rauner, from 2016 to 2018, CPS took out six high-interest loans. Just on these loans, CPS must pay $194 million this year."
CTU's letter to Illinois Attorney General Kwame Raoul requesting a probe says that "the predatory loans CPS took on were at sky-high interest rates unheard of for municipalities and public bodies, especially at a time when interest rates were at record lows."
As the union—now in bargaining talks with the city over a new contract—said in a statement about the request:
In other instances of predatory banking, state and local officials sought remedy through class-action lawsuits and other legal efforts to recoup funds, address the harm, and defend the public. However, in Chicago, the school district is still paying $200 million per year to lending institutions for loans that JPMorgan Chase, among others, sold and earned 9.5% profit or $110 million in the first year alone.
The CTU points to multiple historic examples of public officials upholding their responsibility to defend the public from such practices and is calling on current elected officials to fulfill the same obligation.
CTU Local1 president Stacy Davis Gates stressed Wednesday that "it is not that Chicago Public Schools does not have the funds. It's that Rahm Emanuel sold the school district to Jamie Dimon, JPMorgan Chase, and other bankers and left it broke on purpose."
"Our elected officials have the responsibility to investigate those predatory bank deals, just as they did successfully in the wake of the subprime mortgage crisis, and recoup the hundreds of millions of taxpayer dollars that the banks stole from the public and our children," she asserted.
The union is arguing that Democratic Illinois Gov. JB Pritzker, the Chicago Board of Education, and city officials including Treasurer Melissa Conyears-Ervin and Mayor Brandon Johnson, a former CTU organizer, "must all play a role in helping fund our schools and undoing the damage from the Rahm and Rauner years of predatory bank deals, and the decades of inadequate state funding."
CTU held a Wednesday morning press conference, during which Saqib Bhatti, co-founder and executive director of the Action Center on Race & the Economy, said that "we're here at Chase today because Chase took a bunch of money that belongs to our kids."
"CPS is [in] dire financial straights right now, and one of the big reasons is because banks like JPMorgan Chase and Bank of America systematically ripped off CPS for years and years and years," Bhatti continued, surrounded by people holding signs with messages including "Chase Profits Off Students" and "Bad Bank Deals Cost CPS."
"We know during the subprime crisis that banks were selling predatory loans to Black and brown families, loans that were designed to fail," he explained. "They did the same thing with CPS."
CTU also invited Bhatti to speak during Tuesday's public bargaining session at Morgan Park High School—the third event of its kind since the union began negotiating with CPS in April, before the teachers contract expired on June 30.
The Chicago Board of Education passed a $9.9 billion budget last month. As Chalkbeatnoted at the time, it features "cuts to central staff and administrative costs to help close a roughly half-billion-dollar deficit," and doesn't account for increases to teacher salaries, due to ongoing talks. Both Johnson and the union opposed staff layoffs.
CPS claimed during the Tuesday event that the additional cost from just 52 of over 700 CTU contract proposals would increase the district's projected deficit for fiscal year 2026 from $509 million to $2.9 billion, and by fiscal year 2029 it would hit $4 billion.
As the
Sun-Times reported:
The CTU's bargaining presentation for Tuesday's session did not ask the district to take out a loan, but it challenged officials' financial analysis and claims that they lack funding.
The union pointed to revenue initiatives that the city and state could explore, like more heavily taxing millionaires and corporations—which would require changes to state law—or seeking federal funding for school building improvements. The union also suggested efforts that could take years and would not solve the budget problems in the short term, like fighting banks for past "predatory" loans to CPS or seeking money back from past "bad vendor contracts."
"These predatory deals are costing hundreds of millions a year," said Pavlyn Jankov, research manager for the CTU. "The district has to make every effort to claw back those funds."
The newspaper noted that CPS chief financial officer Miroslava Mejia Krug "revealed that the school district is actually a part of some national lawsuits against banks, but it is unclear whether those lawsuits specifically address high-interest loans."