Big Banks Slam the Brakes on Public Transit
Dale Burnett stood in the lobby of a Chase bank in downtown Chicago the morning of June 7 and explained why Chase and other big banks need to stop gouging millions from the city’s public transit system. A home care worker who cannot afford a car, Burnett’s job pays her poverty wages and she cannot afford fare increases or service cuts. In contrast, Jamie Dimon, CEO of Chase, has a $23 million compensation package this year. Nationally, 43% of transit riders make under 25,000 annually.
Burnett was among 50 Chicagoland transit riders and community activists who came to send a letter to CEO Jamie Dimon. Representing a coalition of transit riders and transit workers called ReFund Transit, they were asking him to renegotiate the interest rate swaps that are bleeding public transit across the USA. Simultaneous protests by ReFund Transit were held in other US cities.
Dale Burnett had this to say:
“We are here today because Chase and other big banks are ripping off money for our transit system…I live on the South Side of Chicago. I am a personal assistant for the Illinois Department of Human Services. I provide key life services so an individual can live in their home with dignity.Without me they cannot live and without them, I cannot live. We cannot make any more cuts for vital services, whether its health care, education and transit. I depend upon Chicago’s public transit system for my life.”
Interest rate swaps were among a swarm of exotic securities that gestated inside of Wall Street and then burst forth to reproduce across the planet. What follows is the short version of how swaps work. For the long version please download this free report.
How Interest Rate Swaps Work
To fund new projects with the swaps, the banks asked that cities and states pay the loans at a fixed rate, but the banks would pay back a variable rate that the cities and states could use to pay the interest. The swaps were kind of rebate, but a treacherous one.
Then came the 2008 Crash, the tax payer funded bank bailout, and the decision by the Federal Reserve to lower interest rates to near zero. Now the banks could borrow from the Fed almost for free, and their swap payments to cities fell to nearly zero. The cities were stuck with a fixed rate of anywhere of 3% to over 6%.
What subprime mortgages did to the housing market and what payday loans do to hard-pressed working class families, credit default swaps are doing to transit systems. No wonder transit activists were chanting “Banks got bailed out. We got sold out” in the lobbies of big banks from coast to coast the morning of June 7. Illinois alone loses over $88 million a year, second only to NYC. The USA as a whole is losing $529 million dollars annually. Transit was only one type of project funded through the swaps, but public transit has been hit by these losses especially hard.
It gets worse. Investigators from several nations including the US Justice Department are looking into charges that banks conspired to manipulate interests rates illegally to extort even more cash from cash-strapped municipalities. Fortune calls it,” The Wall Street scandal no one is talking about”:
[T]he government disclosed that it is looking into bringing criminal cases against traders and banks that manipulated a key bank lending rate, called LIBOR… Both Barclays and Deutsche Bank have disclosed that they have been the focus of investigations. Banks have suspended dozens of traders. Today, Credit Suisse announced that it was cooperating with regulators on the case. Traders at UBS reportedly are already working with the government on its investigation.
So how does shortchanging public transit affect riders?
In Chicago transit riders report crowded buses and trains. Routes have been cut and buses come less frequently. Rapid transit lines have aging track sections where the EL trains crawl slowly. Night service, so critical to people who do shift work, is spotty as some El lines shut down in the early morning hours.
Chicago Transit Authority President Forest Claypool seems determined to put through further fare increases (among the highest in the nation) and even more service cuts. There is talk of creating a “distance fare structure,” which would hit low income workers especially hard as many jobs are in the suburbs, far from the homes of Chicago workers. A former CTA intern released a report calling for automatic fare increases, which he claims would take the issue “out of politics and public opinion.” The Chicago Tribune gushed over his ideas in a glowing article that excluded any independent transit rider or transit worker input, thus demonstrating their contempt for the democratic process.
Disabled passengers are experiencing a rash of problems. A team of reporters from Chicago’s Columbia College investigating the El system found:
“…broken elevators, handicap turnstiles and automatic doors at 16 stations, while there were no automatic doors at another 20 stations. In all, 36 of 88 stations the CTA labels as accessible had problems. And in several cases, the same problems were discovered weeks later on second and third visits to the stations.”
Michelle Robbins of Chicago’s Access Living has given up riding the CTA trains because of accessibility problems and has had repeated problems on CTA buses. She has no plans to remain silent saying,” It’s my right to ride.”
Why is CTA management blaming CTA workers for its woes?
CTA management has unleashed a torrent of abuse of abuse at the CTA workers, blaming them for the crisis because of their wages, work rules and benefits. No mention of the big banks or any of Chicago’s LaSalle Street financial barons though. Operating buses and trains is a vital city service. It’s also a demanding and stressful job. Everyday CTA workers know that even a small mistake in judgement can cost lives.
CTA bus operator Pat Mojarro put it this way in 2010,
“We are verbally and physically attacked every day. We are expected to be police, homeland security, lost and found, maintenance, doctor and psychiatrist for the public. Add that up and see how much we are underpaid.”
CTA workers are among the highest paid transit workers in the country, topping out at $28.13 for experienced rail operators. This should be a point of pride for Chicago, whose leaders claim to want more middle class people in the city. Apparently their “middle class” does not include the bus and train operators, without whom the regional economy would collapse.
The CTA workers are represented by two locals of the Amalgamated Transit Union (ATU). The ATU has made major concessions in the past, to the point that many workers are angry with their union. CTA workers point to a rash of recent arbitrary firings and a broken grievance procedure that provides little defense against management injustices.
The CTA is relying on more part-time employees who make less money and have fewer rights. Workers question the CTA’s policy of pressuring employees to come in if sick or injured. The alternative can be disciplinary action. Does Chicago want bus and train operators coming to work ill or injured; in a condition that might impair their ability to react effectively in an emergency?
CTA workers also fear that Mayor Rahm Emanuel is maneuvering to eventually privatize the transit system. In other cities and towns, privatizing public transit has led to lower wages for workers and deteriorating service for riders.
Although it’s called public transit, CTA workers are reluctant to speak publicly about the agency’s problems or solutions that the workers may have. Forest Claypool, the darling of Chicago’s “reformers” for years, has instituted a virtual reign of terror. Employees are afraid of losing their jobs if they join the public discussion about transit issues. The very people who have the most intimate knowledge of public transit are being silenced. It makes you wonder what “reformer” Claypool is trying to hide.
Javier Perez of the ATU tells how his union is joining with riders to explain,”…how these bank swaps work and how they are taking money away from the State of Illinois.”
It’s time for big banks and corporations to step up
Chase and other mega-corporations need to do their part to improve public transit. After all it is public transit that gets many of the USA’s workers to the jobs that generate profits for business owners. This translates into mega-profits for the finance industry; the ones who are bleeding transit with their interest rate swaps and the low taxes on their casino-style financial transactions.
According to the Public Transportation Association,”Every $1 invested in public transportation generates approximately $4 in economic returns.” Public investment may not be as breathtaking as crashing entire economies with toxic securities, but at least it gets people to work and home again.
Getting the big banks to negotiate a better deal on interest rate swaps is necessary and proper. Cities like Richmond, CA and Detroit, MI have had some success in renegotiating terms. Goldman Sachs is currently in negotiations with Oakland CA.
Why do we even have transit fares at all?
The interest rate swap scam is a small drop in a large bucket. If we really want people to use transit rather than cars, we need to make transit a genuine public service and eliminate all fares. And yes, the big banks and corporations are going to have to pony up more cash to cover costs. They benefit hugely from public transit.
Fares are annoying. They require expensive fare boxes and turnstiles. They demand complex systems to account for the money and distribute transit cards and electronic card readers. They slow down buses on crowded streets as people line up while fumbling for their money or their transit cards. Fares mean people can’t board through both doors of the bus.They’re an added hassle for the bus operator who has enough to do already.
Photo Credit: CTA
So you think getting rid of fares is crazy? NY mayor Michael Bloomberg, a leading voice of the 1%, doesn’t think so,”I would have mass transit be given away for nothing and charge an awful lot for bringing an automobile into the city.”
The city of Hasselt, Belgium, a metro area of about 300,000 eliminated fares 15 years ago. On the first day, ridership went up 783%. The first year saw ridership rise by 900%. Hallselt has been able to expand the number of routes over the years. With less choking traffic on the streets, bicycle riders and pedestrians feel safer and less stressed. There are smaller cities and towns in the USA that also have eliminated fares like Northampton, MA and Chapel Hill, NC. It does require careful planning however, as Austin, TX found in its unsuccessful experiment with eliminating fares.
Of course, lets get the money back from those interest rate swaps, but we also need to think bigger.
Our car and highway culture kills thousands of people annually with crashes and air pollution. It contributes to the wars for oil and to the climate change that could make entire regions of the planet uninhabitable for human beings. The more people who abandon their cars for public transit powered by renewable energy, the better future we will leave for our children. Public transit could end up helping save millions of lives.
Photo Credit: CTA
I believe Chicago nurse Jan Rodolfo said it best at an Occupy Transit rally last fall here in Chicago:
“Public transportation is no less important than the veins and arteries that bring blood and oxygen to our bodies. And to say that we are going to cut off a neighborhood or a community is like cutting off circulation to a limb and that is totally unacceptable.”
So lets keep public transit flowing, not bleeding.
Photos and cartoons by Estelle Carol and Bob Simpson unless otherwise noted
Correction: An earlier version of this article referred to the swap deals as credit default swaps. That was an error. They were interest rate swaps.
Sources Consulted
Wall Street Collects $4 Billion From Taxpayers As Swaps Backfire by Michael McDonald
The Wall Street multibillion-dollar scandal no one is talking about by Stephan Gandel
Taking Chicago Transit from Good to Great – Building the Vision by Aaron Renn
Riding the Gravy Train by The Refund Transit Coalition
Fare-free Public Transit Could Be Coming to a City Near You by David Olsen
CTA Group Says Mayor’s Plans Will Destroy Public Transit
Absent CTA workers force riders to wait by Jon Hilkevitch
Scheduled fare hikes for trains and buses is best policy, study says by Jon Hilkevitch
We Have Your City. Pay Up or Else by Darwin BondGraham
The Inaccessible CTA by Kaitlyn McAvoy
Filed under: Society and Economy
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Rahm, you bungled the whole NATO weekend
It’s been a week since the NATO protests and I’ve been thinking about them on and off, especially after reading a few Crain’s Chicago Business articles that questioned whether the whole shebang was really good for the city and its businesses. A sample below:
What seems like a good idea at the start can quickly go sour, as anyone who’s ever offered to pick up the tab in a crowded bar can attest. Still mildly hung over from the NATO experience, we now await a full accounting of the weekend’s total cost.
Our guess is that the “Blues Brothers”-scale army of security personnel so visible throughout the NATO conference will be pricey, though presumably the feds will chip in something to defray that particular expense. Just how much we won’t know for a while.
The city’s restaurants, retailers, cabbies and museums—idled as Chicagoans avoided the Loop the way a preschooler avoids a salad bar —won’t be so lucky. Could these businesses apply for federal disaster relief? They may have a case…
And oddly, in its zeal to train the locals to duck and cover, Chicago may have inadvertently reinforced the cow-town image we seem so eager to shake: Out-of-town media reports, while highlighting the city’s charms, also noted the overwhelming police presence and the almost otherworldly emptiness of the downtown area.
As I thought about public event rowdiness and violence, I remembered how some of our sports fans get really riled up after a close game with a hated rival. Not pleasant to be around as they surge into the streets. Even our storied St. Patricks Day Parades have ended badly some years as fake Irish with their leprechaun t-shirts grappled with police while barfing up green beer. Read more
Filed under: Militarism, US politics
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Do Nurses Have an Rx for Our Ailing Economy?
They became a Chicago media sensation after they streamed into Chicago’s Daley Plaza on the morning of May 18, wearing the now familiar National Nurses United (NNU) red scrubs. Many of them had the green caps and masks you’ve seen in nearly every Robin Hood movie ever made. The NNU is the largest union of nurses in the USA and one of the more progressive unions in the AFL-CIO. In addition to improving working conditions for nurses, the NNU has taken on the role of trying to nurse our sick economy back to health.
Near the Picasso sculpture in Daley Plaza, the NNU had a stage with a large banner of a smiling nurse in a Robin Hood outfit. Next to her was another banner of Sherwood Forest itself which served as the backdrop to the speeches, skits and music. The nurses put on quite a show, all in support of taxing Wall Street.
Filed under: Society and Economy, US politics
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Chicago Mercantile Exchange Entrance Blocked As Protesters Criticize Huge Tax Break(Updated!)
Seniors, people with disabilities and health care workers blocked the front entrance to the Chicago Mercantile Exchange(CME) Wednesday around 9:30 this morning, as well the adjacent Jackson and LaSalle Streets. Police moved in about half an hour later and ordered people to clear the streets or face arrest. Demonstrators were protesting the CME’s parent company (CME Group) which was awarded multi-million-dollar tax breaks while human services were being cut by the State of Illinois.
Protesters block Jackson Blvd in front of the Chicago Mercantile Exchange
Most of the demonstrators moved on to the sidewalk, but some continued to block the street by sitting down or not moving their wheelchairs. They were arrested and escorted to an impromptu arrest area next to the CME building, given citations and then released from custody. According to arrestee Jim Rhodes, a total of 15 people were arrested and processed.
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Caterpillar Machinists Strike Is Two Weeks Old & Holding Steady
“Caterpillar has work plans, processes, policies and people ready to be deployed in the event of any business interruption, whether it is a tornado, fire or a strike.”—Caterpillar spokesperson Rusty Dunn: April 30, 2012
Thanks for nothing, Rusty Dunn. You just equated 780 striking Caterpillar workers to a potentially disastrous tornado or fire. The strike began on May 1 with peaceful picketing by the International Association of Machinists (IAM) Lodge 851. A few days later the union called for a solidarity rally in front of the Caterpillar plant near Joliet IL.
Mr. Dunn, I was at that IAM Lodge 851 strike rally on Friday May 11. I saw a sea of a red union shirts. I heard speeches and I listened to what the striking Cat workers had to say. I walked among people who made Caterpillar a global leader in heavy construction equipment. They are builders, not wreckers. I saw anger, but not rage. I saw quiet determination, but not fury. I saw human beings who work hard and solve complex production problems everyday. They are worth every penny that Caterpillar has been paying them and more. Rusty Dunn, you owe them a heartfelt apology.
Filed under: Global issues, Society and Economy, Unions
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They Call Themselves the Troublemakers Union
Because I am also submitting this to a local Chicago publication, the diary mentions mostly Chicago participants.
Over the weekend of May 4-6, 1500 union members, workers’ center activists and working class rebels gathered at the Crowne Plaza hotel in Rosemont IL for the biennial Labor Notes Conference. Labor Notes is the monthly magazine for labor activists who “want to put the movement back into the labor movement.” The publication grew out of the rank and file labor revolts of the 1970’s and for the past 33 years has reported on key labor struggles and issues. Not satisfied with just writing about labor insurgencies, Labor Notes also convenes special organizing workshops in addition to their regular national conferences.
Labor Notes readers proudly think of themselves as part of the “International Troublemakers and Boat-Rockers Union”. Their symbol is the slingshot, a weapon associated with David bringing down the mighty Goliath. It’s not an actual union of course, but a state of mind. Their brand of aggressive organizing is hated by global corporations. It is also unwelcome among those union leaders who cling to the tattered status quo of their big salaries with little effective action to show for it. Workers from 20 nations, including the USA attended the 2012 meeting.
Filed under: Global issues, Unions
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Addie Wyatt 1924-2012: A Life of Christian Faith & Labor Solidarity
How does a person of faith live a purposeful life in a world gone wrong? Where does a moral vision come from, a vision that can thrive despite the inevitable blows that fall upon it?
I’ve been thinking about that a lot since Addie Wyatt, the celebrated South Side Chicago labor leader died in March of this year. I read several of the obituaries about her, but none of them really explained the road she traveled to become an associate of Dr. Martin Luther King, a founder of the Coalition of Labor Union Women, an international vice-president of the United Food and Commercial Workers(UFCW) and a Time Magazine Person of the Year (1975).
She was a very unique and talented person, but throughout her life, she had the solidarity of others to draw strength from. Great leaders need great people to work with them if they are to accomplish their goals. The obituaries I read in the mainstream media left out that she not only shaped social justice movements, but that she was shaped by them as well. After reviewing her life and accomplishments, I don’t think Addie Wyatt would want to be remembered as a one woman show.
Filed under: Race and gender, Society and Economy, Unions
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A Saturday Health Fair on Woodlawn Ave In Chicago(Updated)
UPDATE 5:15 Central Time April 26 There are conflicting reports that Mayor Rahm Emanuel is prepared to offer concessions concerning the mental health clinic closings in Chicago. This comes after many days of protest that include 35 arrests. Two Nobel Prize winners visited the Woodlawn Occupation this morning to offer their support. If I can confirm any news, I’ll pass it on.
It’s a long ride on the CTA Green Line from Oak Park to 63rd and Woodlawn Ave where the Mental Health Movement has occupied an unused lot in front of the Woodlawn clinic. I’ve taken that ride several times in the past week or so, most recently on Saturday April 21st for the Mental Health Movement’s day-long health fair.
The Mental Health Movement is made up of mental health workers, mental health clinic users, plus their supporters. It has been fighting the closure of 6 mental health clinics in Chicago. Thirty-five people have been arrested so far in the struggle. More about that HERE and HERE. Yesterday, Mayor Rahm Emanuel offered free bus passes to patients of the closed clinics(!)
Photo of the original tent encampment
Filed under: Society and Economy, US politics
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Occupy Mental Health! New Update.
UPDATE: The the encampment in the vacant lot across the street from Chicago’s Woodlawn Clinic was dismantled by the police, but no arrests were made. The Woodlawn Mental Health Clinic is scheduled to be closed along with 5 other mental health clinics. Mental health workers and patients had barricaded themselves inside the clinic last Thursday night until forcibly ousted by the Chicago police. 23 people were arrested.
People continued to occupy by sitting in chairs and sleeping in cars. It is now 12:25 in the afternoon on Tuesday & I’m at a coffee shop at the corner. There are about 12-15 people across the street from the clinic with a car and van full of camping equipment. They have set up a table with food and signup sheets. Last night the cops said that owner of the vacant lot where they had set up camp had complained. It was a lie. The complaint did not come from the owner. They did lose a tent to the police, but managed to hang on to most of their stuff. They plan to stay the night again. The City Council is planning to meet about Rahm’s big infrastructure plan tomorrow morning.The demonstrators a hoping some alderpeople will raise the issue of the mental health clinics.
2 PEOPLE ARRESTED. POLICE FORBID CAMPING IN VACANT LOT ACROSS FROM WOODLAWN CLINIC
After a press conference at 2 pm on Tuesday attended by the media, the Mental Health Movement began erecting tents in the vacant lot across from the Woodlawn Clinic. Almost immediately the Chicago Police arrived and threatened anyone with arrest until the tents were taken down. I saw two people arrested almost at random as the protestors tried to comply with the order.
Original diary begins below:
While riding the El down to the Monday morning press conference by Chicago’s Mental Health Movement, I couldn’t help but reflect on Rahm’s Emanuel’s obsessive-compulsive disorder. He is obsessive about funneling money to Chicago’s wealthy and compulsive about his attacks on services for Chicago’s working class. Rahm’s latest offensive is the closing of 6 mental health centers.
The issue of closing mental health clinics first came up last fall during the protests surrounding Mayor Emanuel’s proposed budget, which also included slashing library services, privatization of neighborhood health clinics and layoffs of public employees. There was an hours long sit-in outside the Mayors office demanding that all mental health clinics remain open. Below is a video produced shortly after the fall round of protests.
OUR LIVES ON THE LINE: Voices from Chicago’s mental health clinics
Filed under: Society and Economy, US politics
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The Time I Got Busted by An Alabama State Trooper— In Maryland
Over at Open Salon they asked that people submit stories of their petty arrests. Here’s mine. Since it involves some American political history about George Wallace and racism in America, I thought it might be of interest to some Daily Kos readers as well.
For George Corley Wallace, his 1972 Presidential campaign swing through Maryland was one seriously bad trip. He was met by riots in Hagerstown and Frederick, by noisy counter-demonstrations at Wheaton Plaza and Capital Plaza near DC and was seriously wounded by gunfire in Laurel. And me? I managed to get myself arrested by an Alabama state trooper ——in Maryland no less.
Although mostly forgotten now, Wallace was the Halley’s Comet of the neo-confederate universe in the 1960’s, trailing a constellation of stars and bars behind him. As governor of Alabama he stood in front of the schoolhouse door at the University of Alabama in 1962 in an unsuccessful attempt to prevent its desegregation by black students.
At his 1963 gubernatorial inauguration he vowed,”Segregation Now. Segregation Tomorrow! Segregation Forever!” When segregation was outlawed by the 1964 Civil Rights Act, he changed his rhetoric to the racially coded language that has inspired generations of Republican politicians from Richard Nixon to Newt Gingrich. Read more
Filed under: Race and gender, Society and Economy, US politics
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