Chicago Teachers Union president Karen Lewis may look lean and svelte ever since her weight reduction surgery down in Mexico, but she has been on a recent political losing streak that would worry the point guard of the Washington Generals.
Her 2012 teachers strike was largely a bust. The candidate she backed for Chicago mayor in 2015 lost. She has lost battle after battle against the local school board and her arch nemesis, Mayor Rahm Emanuel. (RELATED: Chicago Teachers Union Chief Faults ‘Rich White People’ For City’s Education Mess)
And now this.
Last week, the Chicago Teachers Union blasted out an email urging members to sever all ties with Bank of America.
The email entitled “Boycott Bank of America” blames Bank of America for the calamity of low interest rates.
“Banks like Bank of America were active in manipulating the real estate market with slick stock strategies that blew up in all of our faces in 2008,” the missive explains. “Their irresponsible actions caused a recession and forced the Federal Reserve to bring interests rates down around zero percent. As a result, cities like Chicago lost money on its bet that interest rates would rise, while the banks — which caused the collapse of interest rates — profited.”
The city of Chicago lost more than $200 million because it chose to make bad market bets by purchasing auction market securities at an unbelievably terrible time.
Chicago Public Schools, the third-largest taxpayer-funded school system in the nation, also faced a grave and immediate financial crisis last month when a mammoth $634 million pension payment came due on June 30. The lost bet with Bank of America made things worse.
City officials ultimately made the payment but they had to trim budgets. About 1,400 Chicago public school teachers and staffers were expected to lose their jobs in order to finance the $634 million pension debt. (RELATED: Chicago Fires 1,400 Teachers To Fund Extravagant Pensions)
The Second City covered the rest of a massive $1.1 billion budget deficit with heavy borrowing.
“Holding Bank of America responsible would restore millions of dollars to our schools at the very moment when every dollar counts,” the teachers union email declares. “If our school district and elected leaders won’t take action to hold the banks accountable, then we will do it ourselves.”
In an attached flyer further explaining the Bank of America conspiracy theory, the Chicago Teachers Union announces — in all-capital letters — that “BANKS CRASH THE ECONOMY.”
Under the all-caps heading “BANKS LIKE BANK OF AMERICA CAUSED CITY, SCHOOLS TO LOSE HUNDREDS OF MILLIONS,” the union proclaims that crooked bankers “crashed the economy, cost us millions of jobs, took our homes and our retirements, and eventually got bailed out with taxpayer money.”
“How is that fair?”
The angry email and flyer are likely referring to fraud charges against Bank of America which resulted in billions in claims and penalties against the bank for the sale of allegedly toxic mortgage-backed securities to Fannie Mae and Freddie Mac, two government-sponsored mortgage corporations.
Bank of America has settled some claims against it but continues to dispute others.
Another Chicago Teachers Union conspiracy theory promoted by the Chicago Teachers Union is that Chicago’s Board of Education is “broke on purpose.”
In announcing the 1,400 teacher and staffer layoffs, Mayor Emanuel blamed the rest of the state for not picking up the slack, saying the rest of Illinois doesn’t pay its fair share for pensions.
“You negotiate with your teachers in Aurora…Then we get to pay for it,” Emanuel charged at a press conference. He said the state should change its funding formula, which taxes Chicago residents at a higher rate than other state residents. (RELATED: Young Mayor Rahm Was A SHIRTLESS BADASS Who Took On The Nazis In The Summer Of ’78)
The Chicago Teachers Union released a statement saying it was totally ‘blindsided” by the mass layoffs. The union accused city officials of trying to “retaliate” for a recent breakdown in contract negotiations.
“These layoffs prove that the Board never intended to make the pension payment in good faith,” Lewis fulminated.
Thousands of retired Illinois teachers receive a six-figure pension. The typical teacher received more in pension payments than they personally paid into the retirement system within just 20 months of retirement. Most teachers retire at age 59 or younger, and the lifetime pension cost for each and every retired teacher in the state is estimated to exceed $2 million. Not helping things for the state is an annual 3 percent cost of living adjustment that is fully guaranteed and totally untethered from actual inflation rates.
In 2013, Illinois lawmakers passed a pension reform bill that tried to scale back benefits to contain costs, but the Chicago Teachers Union and other labor groups sued. In May, a state judge ruled that it was unconstitutional for Illinois to make any cuts whatsoever to negotiated pension payments.
The bond rating of the Chicago Public Schools has steadily deteriorated over the last decade. For example, while Standard & Poor’s gave CPS an A+ rating in 2006, that rating is now A-. Moody’s Investor Services gave the district an A2 rating in 2006 but the Moody’s rating is now Ba3.
This Moody’s rating of Ba3 means investing in Chicago’s public schools is “speculative” and “subject to substantial credit risk.”