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Illinois Lawmakers Join Call to Investigate the Banks

On Thursday, Illinois residents delivered more than 88,000 petition signatures to the Chicago field office of the Securities and Exchange Commission (SEC), calling on the agency to investigate the toxic swap deals that are draining billions from local and state governments. In addition to an investigation, petitioners called for the SEC to make bankers return all ill-gotten profits gained from deceptive and fraudulent practices.

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Representative Chris Welch (pictured above), Representative Robert Martwick, and ChicagoAlderman Carlos Ramirez Rosa joined with community members calling on the SEC to take action.

These toxic swap deals contributed to budget shortfalls that led to schools closing in Chicago,water shutoffs in Baltimore, and devastating environmental and health issues in Los Angeles.  These same bad deals also helped lead to the bankruptcy of Jefferson County, Alabama and Detroit, Michigan.  The State of Illinois has already lost over $684 million to Wall Street banks on these deals and could be on the hook for an additional $870 million on November 27th if action is not taken.

The SEC is charged with making sure banks deal fairly with investors and borrowers. The SEC not only has the authority to enforce fair dealing rules against Wall Street banks, but also to require that financial institutions return any ill-gotten gains (read: profits made by violating fair dealing rules). The SEC has already issued judgements against many of the banks who peddled these deals to the State of Illinois.

“In many places around the country, big banks appear to have violated their legal obligations of ‘fair dealing’ by overstating the benefits and understating the risks of deals that are now leaching billions of dollars from taxpayers and communities,” said Lisa Donner, Executive Director of Americans for Financial Reform. “The SEC should use their authority to investigate these deals, and to order disgorgement of ill-gotten gains if it finds evidence of wrongdoing.”

Erica Rangel, with Enlace Chicago a member of Grassro, which operates one of two remaining CeaseFire sites operating in the state of Illinois told the crowd, “Right now the state of Illinois is cutting life-saving programs like CeaseFire, LIHEAP, and Senior HomeCare. The money being used to pay out on these toxic swaps isn’t being pulled out of thin air – it is coming from our communities and our programs. We need the SEC to understand the deadly consequences of these swap deals, this last weekend in Chicago we had 64 shootings. How many shootings could have been prevented with full funding of programs like CeaseFire?”