Los Angeles Fires First Shot In California's War On Banks, As Cities Seek To Wrangle Out Of Swaps

hollywood los angeles

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This Los Angeles City Council has passed a resolution to get out of various interest-rate swaps it entered into banks pre-crisis.According to the SEIU, getting out of the swaps, will save LA $19 million per year.

So why does the city think it should be able to get out of legally entered-into swaps without having to pay a cancellation fee?

Because, according to the SEIU’s Marcus Mrowka, all those swaps were entered into pre-crisis, before the banks changed all the rules.

Up next: the union will push for various Northern California municipalities to do the same, potentially costing banks $150 million/year.

Now, why would banks relent to the demands of the cities? Think about it: the cities do business with these banks, and do have leverage of them. Cancelling a few swaps might be well worth it.

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