When Chicago’s city council this month delayed voting on a bond sale sought by Mayor Rahm Emanuel, the elected leaders questioned whether they should go deeper in debt to pay about $100 million to unwind derivative trades, according to a Bloomberg News analysis today. “My fear is that these products designed to offer savings are going to saddle us with two decades of payments,” said Chicago Alderman John Arena, who joined with others to hold up consideration of the deal. States, cities and counties across the U.S. haven’t found a way to skirt the fees they still face from interest-rate swap deals that cost them billions since credit markets unraveled in 2008. Chicago alone has paid $250 million to break the contracts, which banks had the right to cancel after its credit rating was cut to junk by Moody’s Investors Service in May.
