WHEN THE CITY and the Philadelphia School District participated in interest-rate swaps - contracts aimed at trimming city borrowing costs - it backfired and the city ended up dishing out millions to big banks to break the deal.
Now, City Council wants to see if the city can get some of that money back and whether legal action should be pursued.
Councilman Jim Kenney introduced a resolution yesterday calling for hearings to investigate the use of interest-rate swaps.
Local governments and schools were swayed by bankers in the early 2000s to purchase swaps that were dependent on the future of U.S. interest rates. In 2008, when the financial crisis hit, governments had to pay banks the difference once the market interest rates crashed.