A San Francisco supervisor has suggested that San Francisco consider seeking a better financing deal from the investment bank Goldman Sachs for some of the costs associated with its outstanding airport debt.
The comments came as Oakland leaders took to the firm’s San Francisco doorstep, urging other cities to join them in fighting a bank that has become a lightning rod for criticism of the U.S. financial system.
Oakland is trying to get out of a Goldman-brokered interest rate swap that is costing the cash-starved city some
$4 million a year. The swap, entered into 15 years ago as part of a bond sale to hedge against rising interest rates, has turned sour for Oakland now that interest rates are near zero.
At that same Tuesday protest, San Francisco Supervisor John Avalos said The City will pay around $17 million in similar swap fees this year to Goldman and other banks connected to debt financing for its airport.
Avalos subsequently said that he plans to explore whether San Francisco should attempt to renegotiate its payments with Goldman.
“Financial institutions like Goldman Sachs got bailed out but when it comes to aligning their interest rates on municipal loans and bonds to lower federal levels, they say their wealthy shareholders are more important,” Avalos said Wednesday via an aide. “Trickle-down economics that favors the wealthy over everyday people doesn’t work. As a city we should renegotiate our interest rate swap loans so that the people aren’t getting burned.”
Deputy Controller Monique Zmuda said The City paid $4.9 million to Goldman in swap fees during the 2011-2012 fiscal year. The fees were associated with a swap that San Francisco International Airport uses to hedge possible increases in the interest rates on its associated debt with Goldman, Zmuda said.