When I saw the press release from the Chicago Teachers Union announcing that city treasurer Kurt Summer had endorsed their litigation against big banks and interest-rate swaps, I thought it was a joke.
Such lawsuits are the bane of existence to Mayor Rahm and pretty much everyone in his political orbit.
That would include Summers, a former investment banker, appointed by Emanuel in 2014.
What’s next—planning commissioner David Reifman, a former zoning lawyer, joining Tom Tresser’s anti-TIF crusade?
But this is no joke.
In case you forgot, interest-rate swaps are like gangster financing—imagine going to the Sopranos for a loan. Years ago, the city and Chicago Public Schools signed on to complicated borrowing schemes that forced taxpayers to pay obscenely high interest rates.
Since taking office, Emanuel’s borrowed hundreds of millions of dollars to get out of these deals. It’s part of the reason our schools are broke.
Could it be that Summers has seen the light and come to the conclusion that the mayor’s economic policies are madness?
Or is he making a more calculated political decision to distance himself from a mayor whose popularity on the home front falls somewhere between Governor Rauner and Donald Trump?
Most likely, it’s a bit of both.
“To be honest, there are some folks on my team who were worried by the optics of this,” says Summers. “My perspective is consistent. The issue is fiduciary. It’s important to the well being of the city.”
For years, people of the leftist persuasion—particularly at CTU—have urged Emanuel to use whatever power he has to force the banks to renegotiate more favorable terms.
To which the mayor’s responds with lectures that expose his interesting interpretation of contract law.
His lectures go like this: a contract between a city and a bank is etched in stone and can never be renegotiated.
While a contract with pensioner is written in sand and can be washed away with the tides.
In short, don’t mess with my banking boys!
Moreover, the mayor’s resisted attempts to open the books—as the Tribune discovered when the paper had to retain a lawyer before CPS would turn over basic public information on the borrowing deals.
Last year, CTU and the Fraternal Order of Police, the police union, filed a class-action suit to try and force the lenders to renegotiate these some of these borrowing deals.
A couple of weeks ago, Summers quietly met with Lewis and other CTU officials.
After the meeting, Summers agreed to write a letter urging the city’s other pension funds to join the lawsuit.
In case he got cold feet, CTU released a statement praising Summers for having “confirmed what [activists] have been saying for years. . .”
And that is—the mayor’s full of shit.
Well, that was more the subtext of the CTU press release.
In his letter, Summers accused the banks of having “engaged in collusive, anti-competitive behavior that enabled them to maintain control of the interest rate swap market resulting in billions of dollars of unjust enrichment.”
Let’s pause to appreciate the phrase “unjust enrichment” coming from the mouth of former investment banker and Emanuel appointee.
Summers says I shouldn’t be surprised by his political leanings. “I was raised in Chicago—I went to public schools,” he says. “In fact, I went to high school with Jackson Potter [a high-ranking CTU official]. We were on the debate team together.”
Now let’s pause to imagine young Jackson and Kurt listening to Tupac and hanging out in the Whitney Young cafeteria circa 1995.
Also, Summers says this was not a political decision intended to distance himself from Mayor Unpopularity.
Of course, if it does distance him from said mayor, hey, there’s nothing wrong with that.
Also, Summers didn’t run his decision to write the letter by the mayor or Michael Sacks, the mayor’s key adviser and campaign contributor, who also runs Grosvenor Capital.
Summers worked at Grosvenor before the mayor appointed him as treasurer.
Well, you know what I say? I don’t particularly care why a politician does the right thing, so long as the right thing is what he does.
So, welcome to the party, treasurer Summers. Anytime you want to notch it up a bit, let me know.
I’ll be happy to tell you about this other fiduciary nightmare the mayor’s got going—this not-so-little racket called the TIFs.