After the Chicago Teachers Union rejected Chicago Public Schools' latest contract proposal, district officials said they would stop paying a sizable portion of teacher pension contributions and make cuts to school budgets. Union president Karen Lewis referred to these threats as a vindictive "act of war" designed to pressure the union into signing the contract.

Now the battle has shifted to Bank of America. Teachers union recording secretary Michael Brunson just pulled all $726,000 of the union's account money out of Bank of America. The union says that rather than cut school budgets, the school district should recoup the money it has lost from Bank of America due to "toxic interest swaps."

“The board is literally choosing teacher layoffs and special ed cuts to pay Bank of America profits," Brunson said.

In an interest-rate swap, two parties exchange payments on an amount of principal. Banks were supposed to pay the same amount as the borrowers, but as Ellen Brown explained in 2012 piece:

"After the credit crisis broke out, borrowers had to continue selling adjustable-rate securities at auction under the deals. Auction interest rates soared when bond insurers’ ratings were downgraded because of subprime mortgage losses; but the periodic payments that banks made to borrowers as part of the swaps plunged, because they were linked to benchmarks such as Federal Reserve lending rates, which were slashed to almost zero."

The union says that the school district, which is in a $480 million hole, has lost more $502 million as a result of predatory loans from institutions like Bank of America.

The union made it clear that yanking its money was not simply a symbolic gesture and that Bank of America has been misleading the school district about these swaps for years.

Watch a CBS Chicago report on the contract, cuts and Bank of America withdrawal below: