University of California losing millions of dollars on interest-rate bets

The University of California has lost tens of millions of dollars, and is set to lose far more, after making risky bets on interest rates on the advice of Wall Street bankers.

University officials agreed to the financial deals – complex contracts known as interest-rate swaps – because they believed they could save money in the midst of an aggressive building spree.

But the deals are now costing the university an estimated $6 million a year, according to its financial statements.