Jun 132013
 
Hundreds gather outside of the Wayne State University Law School in Detroit on June 10, 2013 to demonstrate against Emergency Manager Kevyn Orr. People in Detroit have rejected bank-imposed austerity. (Photo: Abayomi Azikiwe)

Hundreds gather outside of the Wayne State University Law School in Detroit on June 10, 2013 to demonstrate against Emergency Manager Kevyn Orr. People in Detroit have rejected bank-imposed austerity. (Photo: Abayomi Azikiwe)

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PANW Editor’s Note: This column published in the Detroit News is a clear reflection of the role of the corporate media in the city which has acted as a cheerleader for the banks and corporations in their ongoing destruction of Detroit. This columnist, with no substance, attempts to ridicule the idea that the banks are responsible for the economic crisis in the city, the country and the world.

These media outlets are working with the class interests of the financial institutions that have strangled Detroit through home foreclosures, capital flight, fraudulent municipal loans and bond issues and the dictatorial imposition of emergency management. The corporations are concerned that a mass struggle will develop which will effectively challenge their influence and power within U.S. society.

JUN 11, 2013, 4:11 PM

Anti-EM throng ignores economic reality pushing Detroit to brink of collapse

BY DANIEL HOWES
The Detroit News

Daniel Howes is business columnist and associate business editor of The Detroit News.

Protests, blame and complaints about the venue Emergency Manager Kevyn Orr chose for his public meeting Monday don’t do a single thing to alter the inconvenient truth about Detroit’s dire financial predicament. No, in the time-honored tradition of the city’s dysfunctional politics, the outpouring of emotion merely adds more heat to a grave situation that needs more light, more solutions and a whole lot more cash.

But no. Shortfalls in state revenue sharing are the problem; Gov. Rick Snyder and his emergency manager law are the problem; predatory lending and “the banks” are the problem; Orr and his squadron of big-name consultants are the problem; the news media and the business community are the problem. Yes, everyone but Detroit’s elected officials, reckless financial (mis)management and the voters who made it all possible are to blame for the confluence of forces pushing a once-great American city to the brink of collapse, Chapter 9 bankruptcy, or both.

Orr had it right when he reminded Detroiters Monday that their elected leaders had a year under their consent agreement with the state Treasury Department to begin executing the turnaround themselves. They had a road map, but they refused to use it. They had a chance — several, actually — to convey their prized Belle Isle park to the protections of the state park systems, but they refused to do it. They could have conveyed the city’s Planning and Development Department to the quasi-public Detroit Economic Growth Corp., but they refused to move ahead lest it result in some people losing their jobs.

The ugly truth of Detroit’s precarious financial condition is that the city’s leadership refused to recognize the obvious. Namely, that it’s increasingly meager revenue stream, exacerbated by corruption and dysfunction, was, is and will be woefully inadequate to support its punishing debt load. Yes, Wall Street lenders were all too happy to help the city issue more debt to support its addiction, and, yes, the sharpies booked millions in fat fees — because City Hall asked them to engineer just one more bailout. Why? Because the alternative was too hard, the politics too risky.

The Reckoning will be difficult and painful. The reaction will give new meaning to outrage. The proposed “haircuts” for the city’s creditors will be deep, particularly for those lenders whose positions in the sickest major city in America are not insured or backed by revenue from specific entities. And Chapter 9 bankruptcy? It will be the lawyers’ full-employment act, with the legal bills to match.

June 10, 2013 at 9:12 pm

Orr: ‘Painful sacrifices’ are needed to avoid bankruptcy

Darren A. Nichols
The Detroit News

Detroit Emergency Manager Kevyn Orr laid out his goals for restructuring Detroit during a packed public hearing Monday night, saying “painful sacrifices” will be required if the city is to avoid financialcollapse.

“I’m acutely aware of the demands that we have on city services and the needs we need to address,” Orr said. “Not only have I heard them, I’ve seen them.”

Orr, speaking to a full auditorium at Wayne State University’s Law School, said he doesn’t want to have to resort to bankruptcy, but that he is prepared to do so if he must. He laid out a bleak snapshot of the city’s financial state, but also sought to encourage Detroiters to aspire to a better future.

The hearing Monday, required under the state’s emergency manager law, offered the first chance for the public to address Orr since he was appointed by Gov. Rick Snyder in March.

“This path will require painful sacrifices from all interested parties,” Orr said. “It’s going to take some very difficult decision-making. It’s going to be hard … (but) we can do it. … The city shall rise from the ashes.”

Orr said the goal of his first financial report to the state on May 13 was to “set the table with my priorities.”

“Frankly, they are pretty simple: public safety and reinvestment in the city,” he said.

Orr said the city is “technically insolvent,” and that it would take 68 years to pay off its debt if it were to incur no more.

The city has borrowed more than it can afford to repay, and has been delaying payments to contractors by millions of dollars, he said.

“We have to change,” Orr said. “We need to restructure the city’s operations. We still must work in a way that’s efficient, quicker, (with) more speed and one that says we’re open for business and we will address your concerns.”

Addressing those who believe an EM isn’t necessary, Orr said the city had a chance to correct its problems through a consent agreement forged in March 2012 that “put out certain prescriptions for things that were supposed to be accomplished in a year’s time. And they weren’t.”

Orr also spoke about his background and the racism his family members experienced, saying he understands the struggle of black Detroiters.

“No one can tell me about issues involving discrimination,” he said. “I’ve lived it. … I don’t want anyone to think I don’t understand, in a very real sense, what I’m asking them to do.”

Audience members were given cards to indicate if they wanted to speak. Orr’s staff members said they could take comment from about 25 people.

Attorney Jerome Goldberg, an activist with the group Moratorium Now, told Orr that large banks helped cause many of Detroit’s problems by offering sub-prime loans.

“The idea these same banks now claim first lien on our tax dollars is an absolute outrage,” Goldberg said. “The way to deal with these banks is not to go begging them. They owe us billions of dollars. Negotiate from a position of strength.”

Outside the auditorium, about 40 protesters chanted and held signs before Orr spoke.

Among the groups represented were the National Lawyers Guild and Moratorium Now, a Detroit group opposed to foreclosures.

Demonstrators said it was wrong that Detroit residents were being led by someone they didn’t vote for.

“We’re under the rule of someone not elected by the people,” said Durk Barton, 60, a Detroit artist. “I want all the people of Detroit to rise up.”

Protestors also didn’t like the setting of the meeting, saying it was out of the way and people weren’t given enough notice to attend.

“Many Detroiters are being deprived of a chance to talk,” said Tonya Phillips, 36, a board member of the Detroit chapter of the National Lawyers Guild.

Among the signs held by demonstrators were ones that read “Hands Off Our Pensions” and “Bail Out People Not Banks.”

They also chanted several slogans, including “Kevin Orr is not our boss. Let the banks take the loss.”

Community activist Helen Moore complained that the public had to sit in the balcony of the auditorium for Monday’s session, instead of the main floor. She likened it to the old South.

Orr’s chief of staff, Shani Penn, cautioned that people would be removed if they were disruptive.

“I’m not playing. You will be removed. This is going to be an orderly meeting,” Penn said.

Orr’s first report to the state found that Detroit’s cash-flow crisis makes it “insolvent” and unable to borrow more money to offset debts being made worse by skipping millions in payments for retiree pensions and health care.

Orr said he would use the report as a baseline for paring the city’s $15.6 billion in debt and long-term liabilities.

The report hints that city employees who were not hit by last year’s wage reductions could face pay cuts in the near future and that Wall Street bondholders will be asked to take a haircut to relieve a city that shelled out $133 million in debt payments last year on a $1.23 billion budget.

Orr is expected to present a more detailed restructuring plan June 14 to a group of Detroit creditors in negotiations to keep the city from going bankrupt.

The meeting at Detroit Metropolitan Airport is expected to include up to 150 bondholders, union leaders and pension fund representatives.

dnichols@detroitnews.com
(313) 222-2072

From The Detroit News: http://www.detroitnews.com/article/20130610/METRO01/306100071#ixzz2W4VHKNj7

Even with Detroit’s staggering debt, Orr tells residents: Safety is a priority

10:34 AM, June 11, 2013

By Matt Helms and Joe Guillen
Detroit Free Press Staff Writers

Emergency manager Kevyn Orr, in his first public hearing since he was appointed to take over the troubled city in March, sought to reassure residents that Detroit will emerge from his tenure streamlined, with less debt and a plan to keep it that way.

But he was blunt Monday night about how the path out of financial calamity will be painful and may end up in bankruptcy court, even as he prepares to meet with major creditors this week in hopes of an agreement that could reduce Detroit’s staggering liabilities without a Chapter 9 municipal bankruptcy filing.

“When I first came here and I said I wanted to offer a sincere olive branch — I wanted to set the stage for how I want it to work,” Orr said. “Now look, I’m a trial attorney. I can cut somebody’s throat and leave them to bleed out in the gutter with the best of them. But I didn’t want to do that. That’s not my role in this job. My role in this job is sort of the zen of emergency management.”

In that vein, Orr told dozens of residents at the meeting at a Wayne State University auditorium that the city is insolvent, having spent far more than it takes in for too long, and that his job is to reduce the city’s debt load and stabilize a city that would otherwise fail in its basic duties.

“We’re going to focus on public safety and reinvestment in the city,” Orr told the audience.

Orr’s presentation didn’t deviate much from a grim report he presented to the state May 13, outlining a city with as much as $17 billion in long-term liabilities it can’t afford to pay, deficits it can’t afford to put off and a trashed credit rating that leaves it unable to borrow any longer.

Orr said he had to be careful not to discuss details of confidential negotiations with creditors, but he did say one avenue he intends to pursue is the state proposed lease of Belle Isle to run it as a state park.

“I’m going to pursue that because it relieves us of $6 million a year in cost. I would not sell it,” Orr said.

Those in attendance had to go through metal detectors to hear him.

Orr told the crowd that that he understood the impact of the high-stakes talks he’s engaged in, and how the city’s troubled public services leave residents in the lurch. He said he has met with all of the city’s unions and has spoken with everyday Detroiters, twice mentioning interactions with people at a Popeye’s restaurant, where he said he bumped into a single mother of three who said she fears losing her job because of late city buses.

Detroiters, Orr said, tell him: “We want our city back. We can do it on our own.”

But Orr said the city had its last chance under a consent agreement reached in 2012 that failed to turn around Detroit’s financial mess. He also gave an analysis of the current situation, using a hypothetical scenario to drive home just how serious the city’s debt has become.

“One of the fundamental obligations of a municipality is to provide for the health and safety and welfare of its citizens, and we’re going to pursue that as a priority,” Orr said.

“If you took every dime that the city takes in every year and you did nothing — no fire, no police, no EMTs, no potholes, no fireworks, no salaries, no health care, no benefits — you just took that billion dollars and you used it to pay your debt — $15.6 billion — how many years is that? Fifteen years. You could not pay your debt as it is now in 15 years.

“We have to break the addiction to debt. Because that’s what we’ve been doing for a long time,” Orr said.

The Washington, D.C., bankruptcy lawyer also took a few moments to personalize his journey to Detroit, one that took him from the deep South, the University of Michigan law school, and to a prestigious law firm in the nation’s capital. Along the way, Orr said, his family has encountered injustices.

Orr said he’s only a few generations from picking cotton on plantations, and though he has been fortunate to have become a well-paid corporate lawyer, “don’t think for one minute that I don’t understand what I may be asking of you,” Orr said.

“This is not going to be easy,” he told the audience, asking residents to become part of the solution, even if they disagree with him.

Orr’s staff warned attendees they would be removed if there were outburts, but aside from an angry protester early in the meeting, the event was calm and orderly. Protesters outside the meeting peacefully chanted and held signs calling for bailouts for people, not banks.

Marie Burke, holding up a printed copy of an issue socialistworker.org, chanted for Orr to keep his hands off Belle Isle.

“I think this is a manufactured crisis,” said Burke, 30, of southwest Detroit. “There’s plenty of other options the city should use to get itself out of debt.”

Burke said Orr should raise taxes on corporations such as General Motors and avoid paying the city’s debts to banks.

Many of the protestors outside Orr’s speech focused their scorn on financial institutions who participated in predatory lending and other practices they said contributed to Detroit’s decline.

David Sole, a 65-year-old retired city worker, said Orr has a responsibility to go after the banks.

“His job by law is to pay the banks. That’s the only thing guaranteed in the law. We say no!” Sole said between chants with protestors. “He should indict the banks and not pay them.”

Orr is expected to meet with creditors on Friday and present to them a proposal that would pay them less than 10 cents on the dollar.

The meeting Monday at WSU — required under the state’s emergency manager law — was Orr’s first major public interaction since he was appointed emergency manager in March, given an 18-month assignment in which he’s expected to restructure city government and tackle its long-term debt and liabilities. Orr’s May 13 report to the state after his first 45 days on the job that found the city insolvent, its debts masked over by decades of borrowing and it’s credit limit tapped out.

Orr fielded 12 questions from the audience after his address.

Attendee Stephanie Howells questioned the choice of location for Orr’s speech. Wayne State was picked, she theorized, because the school’s police force could bolster security and because the campus is less accessible than other potential neighborhood sites.

“Strategically this meeting is avoiding community accessibility,” Howells said. “This is not an accident. It’s very intentional.”

Mayor Dave Bing was in Washington, D.C., Monday on city business and did not attend the meeting. City Councilmen James Tate, Andre Spivey and Gary Brown were there, along with the Financial Advisory Board members Glenda Price and Ken Whipple.

Contact Matt Helms: 313-222-1450 or mhelms@freepress.com or Joe Guillen: 313-222-6678 or jguillen@freepress.com.

Judge orders governor, law firm to produce records in Detroit emergency manager lawsuit

8:43 PM, June 12, 2013
Detroit Free Press

LANSING — Gov. Rick Snyder plans to appeal an Ingham County judge’s ruling in a lawsuit over the appointment of Detroit emergency manager Kevyn Orr, which a spokeswoman said Wednesday is “turning into a fishing expedition.”

Judge William Collette ordered the governor’s office and a Washington, D.C., law firm to produce e-mail and other records related to the March 15 recruitment and appointment of Orr.

Collette also ordered Richard Baird, an adviser to Snyder, to sit for a second deposition and give evidence about other candidates interviewed for the emergency manager job. He made the orders at a hearing in Mason Wednesday in connection with a lawsuit brought by union activist and indicted Highland Park Schools board member Robert Davis.

Davis is seeking to overturn Orr’s appointment, alleging violations of the Open Meetings Act and an unlawful role in his selection by Snyder.

■ Davis said after the hearing he believes his lawsuit is getting to the bottom of how Orr’s appointment came about, and it “shows wrongdoing.”

But Snyder spokeswoman Sara Wurfel said disclosures required by Collette are irrelevant to compliance with the Open Meetings Act and “would negatively impact the ability to get talented, qualified, principled individuals to consider a role in public service and apply for certain sensitive posts.”

Another hearing in the case is set for next Wednesday.

Collette earlier ordered the state to produce e-mail and other records related to the emergency manager search that were subject to the Michigan Freedom of Information Act.

Neither the governor’s office nor the Jones Day law firm where Orr previously worked are subject to FOIA. Collette on Wednesday upheld subpoenas for the governor’s office and the law firm to produce documents.

Baird, who is not a state employee but is a contractor paid $100,000 a year from a Snyder nonprofit corporation funded by undisclosed donations, had claimed executive privilege in refusing to give evidence related to 20 candidates he said were in the running for the Detroit emergency manager job.

Collette rejected the executive-privilege claim. Davis said a second deposition is being scheduled with Baird.

E-mail released earlier call into question whether Orr was recruited in compliance with the Open Meetings Act and other state law.

Legal expert Lawrence Dubin of University of Detroit Mercy School of Law said even if state law was violated, Orr’s appointment wouldn’t likely be overturned on that basis.

The e-mail suggest Snyder was asking when Orr would be ready to start work, even before a state review panel declared a financial emergency in Detroit on Feb. 19.

Davis awaits trial in federal court on allegations he stole money while a board member at Highland Park Schools. He denies the charges.

Contact Paul Egan: 517-372-8660 or pegan@freepress.com