Bob Blumenfield
Council committee wants to pressure banks to lower rates on bond deal

Los Angeles officials moved Monday to get out of two Wall Street bank contracts that they say soured after the economic crash of 2008. In 2006, the city entered into an interest rate swap deal with Bank of New York Mellon and Dexia, a Franco-Belgian institution, for its Wastewater System Revenue Bond issued in 1988. The rate swap was done to take advantage of what were at the time historically low interest rates. But rates dropped even lower when the economy crashed. This left the city paying more than the market rate, while the banks paid variable rates that were kept low by the Federal Reserve. The 2006 deal had locked in the city's interest rate for 22 years. On Monday, the City...