Yesterday, the City of Richmond announced that it is suing two major investment banks - JP Morgan Chase and the Royal Bank of Canada - along with our former financial advisors, Public Resources Advisory Group and The Majors Group. This lawsuit seeks to recover tens of millions of dollars in payments the city made on illegal derivative contracts.

Yesterday, the City of Richmond announced that it is suing two major investment banks - JP Morgan Chase and the Royal Bank of Canada - along with our former financial advisors, Public Resources Advisory Group and The Majors Group. This lawsuit seeks to recover tens of millions of dollars in payments the city made on illegal derivative contracts.

These complex financial products were presented to the City Council as a way to save money. However, they did not benefit the community. Instead, they drained resources that should have been spent on essential city services like road maintenance, clean streets, and community programs. Even worse, these deals violated California law, which strictly limits how cities can use derivatives. The law is there to protect taxpayers, and these contracts were never in compliance. 

Between 2005 and 2014, before I was elected, Richmond entered into 10 swaps agreements that left us paying out millions, with no real public benefit in return. These financial transactions worsened our already tough financial situation, led to credit downgrades, and made it harder and more expensive for the city to secure future funding at the time.

This lawsuit is about holding these large banks accountable for misleading the city into making these costly, illegal agreements. We’re also pursuing claims against our former financial advisors who failed to warn us about the risks and the legal issues tied to these contracts.

I am proud to have led the charge during my first term in 2021 to analyze our city’s budget, identify these costly swap agreements that had been implemented by previous City Councils, and get us out of these contracts. Because of this, we saved Richmond an estimated $84 million over the next 12 years. We’ve also turned things around by refinancing some of the city’s debt, which has saved us millions and even improved our credit rating.

While we are making good progress, ultimately we must ensure that we don’t ever have predatory loans in our city. We must have our own institutions in Richmond so that we aren’t dependent on big banks who take advantage of small cities like ours. As always, I am committed to holding large entities like corporations and banks accountable so that we have the resources to invest in services that our community needs and deserves.

-Claudia