Goldman Sachs CEO Lloyd Blankfein says
he won’t let Oakland out of its rate swap deal.
OAKLAND//DEBARMENT | During the Great Recession, some financial institutions were deemed “too big to fail,” but as Oakland faces numerous fits and starts in moving forward with the debarment of Goldman Sachs from city contracts, it is becoming clear the administration views the process as “too small to care.”
Oakland Councilmember Rebecca Kaplan acknowledged last Tuesday the indecision and confusion surrounding the council’s latest attempt to begin the debarment of Goldman Sachs was before the council for the third time since last year. Yet, she noted with faux whimsy, “it mysteriously fails to be agendized properly.”
The disenchantment with Goldman Sachs follows a controversial rate swap agreement between the financial behemoth and the city in 1998 which ultimately led to a bad bet for Oakland and costing it millions every year during times of great budget instability. However, numerous outside investigations have found banking intuitions like Goldman Sachs rigged both sides of the bet to great success.
Proponents of debarment realize the act would be only symbolic and would not amount to any savings to the city. Instead, some council members have framed it as the city defiantly speaking out against the treatment of these big banks toward Oakland, and by extension, the progressive populace of the East Bay. However, behind the scenes, the wheels of government have been locked up by the Quan administration.
Not only has the item been before they council without any additional clarity, but it’s seen the light of day on numerous occasions at the council committee level. Last month in a Finance and Management Committee meeting, Councilmember Desley Brooks blasted the city administrator’s office for failing to provide any information for how the council would proceed with the debarment of Goldman Sachs. Instead, an vague report provided by Assistant City Administrator Scott Johnson was resubmitted.
The footdragging has continued. Last Tuesday, following a request by Brooks for the council to reaffirm its desire to begin debarment, the items were again muddled by the exclusion of language that would allow for the debarment resolution to be amended. Moving forward on such an item, without it being first agendized, would be a violation of state sunshine laws, said an assistant city attorney. Brooks said the wording of the resolution stated at a committee meeting last week intended to “reaffirm” the desire of the council, which Councilmember Libby Schaaf also corroborated. However, the word “reaffirm” was somehow absent from the committee’s minutes.
Despite the confusion, a motion to vote on the resolution was almost successful before Mayor Jean Quan hurriedly interrupted the discussion to allow the assistant administrator to pose whether the proposed legislation would immediately forbid Goldman Sachs from bidding on the city’s bonds without a debarment hearing. Brooks, though, took umbrage with the apparent obfuscation from the mayor.
“It was inappropriate for the mayor to pretend like she wanted a point of clarification when was trying to pressure us in how we set policy for this city,” said Brooks, who believes the question could have been asked by Quan beforehand.
Johnson’s main contention though is practical and logistical. What if Goldman Sachs were to anonymously bid for Oakland bonds and be found to be the lowest and winning bidder? The scenario is “conjecture and speculation,” Brooks said “We’ll cross that bridge when we come to it.”
In fact, the wording of the resolution before the council last Tuesday may be inherently in violation of the city’s disbarment ordinance. According to the resolution’s wording, “if Goldman Sachs refuses to terminate the swap agreement within 60 days, then they will be excluded from any future business with the city of Oakland.”
“This is not speculation, said Council President Pat Kernighan, “That is direct language.”
Instead, following a motion by Schaaf to consider approving the “spirit” of the council’s past support for beginning the debarment process, its voted, 8-0, to “reaffirm the sentiment of the resolution.” In essence, the council once against agreed that they agreed last year to begin the act of disbarment against Goldman Sachs.
In the meantime, the robber barons of the new Gilded Age march forward as the victim it robbed through extreme financial chicanery squabble over how to punish the perpetrator. In fact, Oakland will never come close to extracting an eye for an eye from Goldman Sachs. It seems the best punishment possible is choosing which hair to violently pluck from the luxurious and thick shock of hair that rest on head of a financial Goliath.