ABC7 I-Team Investigation
CHICAGO (WLS) -- Chicago Public Schools has made a $725 million tax-exempt bond sale that it says, combined with the $100 million in cuts announced Tuesday, will get the district through the school year by offsetting debt.
Credit-challenged CPS agreed to pay a whopping 8.5 percent interest rate on most of the bonds it sold Wednesday. Some of the money will be used to make interest payments on old debts. The district said it had hoped to secure $875 million from bond sales.
On Wednesday morning, the CTU took its frustration to the bank. Union members rallied at the Bank of America in Chicago's financial district to withdraw hundreds of thousands of dollars and closed their account in an effort to protest investments CPS made with Bank of America. They took $726,000 from the LaSalle Street BofA location to transfer it to Amalgamated Bank.
Even as the teachers union closed one bank account, the I-Team has learned that teachers' pension funds were being invested in financial institutions long-condemned by the union.
Is it hypocritical for Chicago teachers' pension money to be invested in banks that the teachers union claims are toxic and predatory? For years, the union has targeted a dozen banks that it claims the city and school system should stop doing business with.
"We are here today to take a needful and necessary action," said Michael Brunson, recording secretary of the Chicago Teachers Union, the third-highest-ranking member of the union.
The CTU has condemned Emanuel, the city of Chicago and CPS for "risky deals" with so-called predatory lenders, among them the world's largest financial institutions.
An I-Team examination of the most recent teachers' pension fund financials show that more than $505 million is invested in at least six of the very same financial institutions.
Among the firms where teachers' money is currently invested, according to the most recent filing: JP Morgan, UBS, Citigroup, Deutsche Bank and Wells Fargo.
Those financial institutions are on a teachers union hit list. Last month, the union "called on Chicago City Council to take legal action against predatory bank deals" at those institutions and several others.
While the pension board is a state-chartered entity independent from the union, its 12 members are composed of six current public school teachers and three retired teachers. One board member is a CPS principal or administrator and two are appointed by cps. The pension board members have not replied to our questions.
In a statement, a CTU spokesman said while CTU "does not control CTPF investments, we are proud that the CTU members that serve as trustees have helped move the fund toward responsible and progressive investment strategies."
The Chicago Teachers' Pension Fund currently invests more than $10-billion dollars on behalf of 58,000 members. The fund's executive director said that some of their investments in question are long-term that they buy and hold. Late last year, the pension fund filed a federal anti-trust lawsuit against some of its biggest investment banks, claiming a stranglehold on the market by so-called interest rate swaps.
Full statement from Chuck Burbride, executive director of the Chicago Teachers' Pension Fund: "The fund has had an infrastructure investment with JP Morgan since 2008. Infrastructure investments by their nature are long-term, buy and hold investments, in contrast to publicly traded equity and fixed income investments. You might note that we use Deutsch for our securities lending service and Chase for our checking services. The Fund moved the securities lending services in 2014 pursuant to an RFP. We are discussing the issuance of an RFP for our checking services as a routine review of banking services."