For years millionaires and billionaires from the Commercial Club of Chicago, such as Bruce Rauner and Ty Fahner, have misrepresented the real cause of our state’s pension crisis. While public employees such as police officers, fire-fighters, teachers and others have dutifully paid employee contributions for decades, the recent manipulation of financial markets by banks and hedge fund operators has placed the retirement of countless public employees into question.
A resolution passed by the Chicago Teachers Pension Fund is determined to get to the bottom of the fraud and graft that have significantly weakened our economy and jeopardized the future retirement of our public servants. We hope that watch-dogs like the Civic Committee will begin to ask for similar investigations instead of calling for the reduction of existing benefits that working people have earned by virtue of their many years of service.
The resolution notes that “the economic crisis has devastated communities and cost workers billions in their pension funds and through cuts in municipal services: Nine million families have lost their homes to foreclosure; nine million Americans have lost their jobs; 16 million families owe more on their mortgages than their homes are worth; 46 million Americans are now enrolled in the Supplemental Nutrition Assistance Program (SNAP), a 50 percent increase since the financial crash in 2008; and state and local governments that have seen their property and sales tax receipts plummet are facing crippling budget crises.”
In terms of public pensions the resolution draws attention to the fact that City and the City workers’ pension funds may have lost millions of dollars as a result of the fraud perpetrated by the banks: Sixteen of the world’s largest banks allegedly rigged the London Interbank Offered Rate (LIBOR) index to increase their own profits. $800 trillion of financial securities and debt globally is tied to LIBOR, including derivatives and investments held by the City and its workers’ pension funds. The City may have lost millions of dollars on its interest rate swaps as a result of LIBOR fraud. Public pension funds that had investments with returns linked to LIBOR also likely lost millions as a result.
Therefore, the trustees of the Chicago Teachers Pension Fund have acted to form a committee and explore the impact of the LIBOR scandal on the health of the Fund and determine, what, if any legal or other action is required to recover losses due to financial malfeasance. They have also decided to formally request that the Chicago City Council direct staff to determine how much money the City and City workers’ pension funds lost as a result of LIBOR fraud and to explore all legal options at the City’s disposal to recover those losses.
It is time to stop blaming workers for a crisis that they did not create and do not control. We cannot live in a society that shirks its responsibility to hold bad actors accountable for the harm they have imposed upon working families. We cannot endure a situation where the very people attacking our pensions are the ones who have caused the economic instability used to justify the specious attacks on workers. A fair accounting of the pension crisis will give our city and our state a comprehensive road-map to repairing our budget problems and setting the record straight.
Pension Chair, Chicago Teachers Union
Former Trustee / Vice President, Chicago Teachers Pension Fund