When a city is forced to spend more on Wall Street fees than on basic pub­lic ser­vices, it is the sign of trou­ble. When that city is one of Amer­i­ca’s biggest pop­u­la­tion cen­ters, it is the sign of a bur­geon­ing crisis.

'A strong case can be made that the banks that sold these swaps may have breached their ethical, and possibly legal, obligations to the city in executing these deals.'

That’s the key take­away from a recent report look­ing at what has been hap­pen­ing in Los Ange­les over the last few years. Pub­lished by the union-backed Fix LA Coali­tion, the report details how the city has slashed its spend­ing in the wake of rev­enue loss­es from the Wall Street-engi­neered finan­cial cri­sis. Yet, as the analy­sis shows, the city is nonethe­less still being crushed by Wall Street —in this spe­cif­ic case, it is being forced to spend $300 mil­lion a year on finan­cial fees. For some con­text, that’s more than the city spends each year main­tain­ing all of its roads.

So what specif­i­cal­ly are these fees? Accord­ing to the data, rough­ly $200 mil­lion worth of fees go to Wall Street mon­ey man­agers who over­see some of the city’s pen­sion invest­ments. Yet, that’s only a con­ser­v­a­tive esti­mate gleaned from ana­lyz­ing doc­u­ments that are pub­licly avail­able. Because there’s no one cen­tral account­ing of the fees, and because oth­er fees may be secret, the report notes that, just like in most locales, ​“nei­ther the boards nor the invest­ment staff employed by the boards know (exact­ly) how much they pay in total fees.”

Mov­ing for­ward, Los Ange­les is now on the hook for $65.8 mil­lion worth of new fees in the next 14 years, thanks to a 2006 inter­est-rate swap deal.

“(Those) deals were sold on the assump­tion that they would save L.A. tax­pay­ers mon­ey,” notes the report. ​“But after the banks crashed the econ­o­my, the fed­er­al gov­ern­ment drove down inter­est rates as part of the bank bailout, and now the banks are reap­ing a wind­fall at tax­pay­ers’ expense.”

If this lat­ter part of the sto­ry sounds famil­iar, that’s because it is all too com­mon. Indeed, as my Pan­do­Dai­ly col­league Nathaniel Mott and I recent­ly report­ed, this par­tic­u­lar scheme has plagued cities across the country.

For instance, a recent study by for­mer Gold­man Sachs invest­ment banker Wal­lace Turbeville doc­u­ment­ed how an inter­est-rate swap deal was a big dri­ver of Detroit’s fis­cal cri­sis. In his report doc­u­ment­ing Wall Street’s demands for ​“upwards of $250 – 350 mil­lion in swap ter­mi­na­tion pay­ments,” Turbeville con­clud­ed that ​“a strong case can be made that the banks that sold these swaps may have breached their eth­i­cal, and pos­si­bly legal, oblig­a­tions to the city in exe­cut­ing these deals.”

Like­wise, Rolling Stone’s Matt Taib­bi doc­u­ment­ed how inter­est-rate swaps in con­nec­tion with a water treat­ment plant were at the heart of Jef­fer­son Coun­ty, Alabama’s infa­mous bank­rupt­cy.

Mean­while, a front-page New York Times sto­ry in 2010 showed how a swap deal in Den­ver orches­trat­ed by then-super­in­ten­dent Michael Ben­net blew a hole in the city’s school bud­get. In 2013, Bloomberg News report­ed that ​“Wall Street banks col­lect­ed $215.6 mil­lion that Denver’s pub­lic schools paid to unwind swaps and sell bonds” — a ​“sum is about two-thirds of annu­al teach­ing expenses.”

Recount­ing all of this is enough to depress any­one, but there is at least some sliv­er of good news. As of this week, Los Ange­les city coun­cilor Paul Koretz is propos­ing to exclude the banks at the cen­ter of the inter­est-rate scheme from any future busi­ness with the city unless those banks rene­go­ti­ate the terms of their rapa­cious deal.

While this may not be a com­pre­hen­sive solu­tion, and while it may not work per­fect­ly, it is a start. Indeed, the pro­pos­al shows that there are still ways for cities to start com­bat­ing Wall Street’s most destruc­tive schemes. The fight is cer­tain­ly long over­due, but bet­ter late than never.