Council passed a resolution calling on the Federal Reserve to offer zero-interest loans to municipalities to put an end to the massive sums in interest fees that the city pays annually to Wall Street
PHILADELPHIA—On March 11, City Council unanimously passed a resolution calling on the Federal Reserve to offer no-interest, long-term loans to the City of Philadelphia. Introduced by Councilmember Kendra Brooks, the resolution highlights the staggering amount of money the City of Philadelphia loses each year to interest fees that could otherwise be spent on school buildings, dilapidated infrastructure, and underfunded city services.
Currently, Philadelphia pays over $245 million in interest fees to Wall Street investors per year, while the School District of Philadelphia pays over $145 million per year. The resolution urges the City Treasurer’s Office to enter into conversations with the financial institutions underwriting the City’s bonds to negotiate long-term loans with terms of up to 30 years to meet the City’s borrowing needs. With the recent passage of President Joe Biden’s stimulus bill, the City of Philadelphia is slated to receive $1.3 billion from the federal government— just enough to offset budget deficits caused by the pandemic, but far short of what Philadelphia needs to invest in neighborhoods and expand people-focused programs.
The COVID-19 pandemic has exposed deep fissures in the city’s social safety net and public infrastructure, the result of decades of chronic underfunding and austerity. From toxic school conditions that have delayed a return to in-person learning, to the dire shortage of low-income housing, Philadelphia will require a massive influx of funds to support its most vulnerable community members and create a livable environment for future generations. Zero-interest loans from the Federal Reserve offer an unprecedented opportunity to redirect large sums of money from Wall Street to the people of Philadelphia.
“The status quo was killing us and returning to a pre-pandemic city budget isn’t going to cut it,” said Councilmember Kendra Brooks (At-Large). “Our streets are crumbling, our housing stock is toxic, our schools are poisoning our children, and our neighborhoods are hurting. We need to cancel wall street interest payments so we can recover not just from the pandemic, but from decades of austerity and a racist financial system that has decimated working class and poor communities of color. The Fed has the power to offer zero-interest loans to expand needed city services. All we are asking is for the ability to invest in neighborhoods that have been neglected for decades.”
Led by the Action Center on Race and the Economy, the Cancel Wall Street campaign has been embraced across the country, including in Los Angeles, and offers a viable alternative to budget cuts and lay-offs, which disproportionately harm poor and working class communities of color.
“Wall Street banks and credit rating agencies have written the rules of municipal finance– and cities with higher concentrations of people of color are forced to pay even more,” said Saqib Bhatti, Co-Executive Director, Action Center on Race and the Economy. “Banks already make money by discriminating against us, foreclosing on us, nickeling-and-diming us with fees. They shouldn’t also be able to profit from redlining our state and local governments too. The Federal stimulus bill passed yesterday is a huge relief for cities across the country facing down huge deficits. But this bill is only a stop gap in the work to structurally overhaul how cities like Philadelphia raise revenue. To get the cities we deserve and fully fund our communities, we need to cancel payments to Wall Street, tax the rich and divest from programs that hurt our communities.”
“As an educator, I see firsthand how our schools don’t have the resources they need,” said Katherine Riley, educator and organizer with LILAC. “Educators, parents and students beg for healthy and safe schools, and are constantly told there’s not enough money. Teachers are literally paying out of pocket for soap during a pandemic. But Philadelphia is giving Wall Street $245 million per year in interest fees, bolstering Wall Streets’ already huge profits. Our city could save money, and instead invest in our students’ education from pre-K through college with modernized 21st century school buildings and retaining highly qualified educators.”
Read the resolution: CM Brooks Zero Interest Loan Resolution