Despite failure to negotiate in “good faith” Rhodes says state was justified in filing for bankruptcy
By Abayomi Azikiwe
Editor, Pan-African News Wire
Wednesday, December 4, 2013
Judge Steven Rhodes has ruled that a state-imposed emergency manager was acting legally when bankruptcy was filed over and above the objections of the people of Detroit. The judge also said that pensions guaranteed under the state constitution of Michigan could be diminished.
Rhodes said that even though Kevyn Orr, the emergency manager and a former partner to the corporate law firm Jones Day, did not negotiate in good faith with unions, pensioners and creditors, such a process was impractical. There was no recognition or acknowledgement of the role of the banks and corporations in the financial destruction of the city and its people in the today’s eligibility decision.
Republican Gov. Rick Snyder appointed Orr in March against the wishes of city residents and elected officials. Facing widespread opposition to his restructuring policies in the courts and in the streets, Orr filed for bankruptcy in July.
This ruling took place at the same time as union members, retirees and community activists demonstrated outside the courtroom in downtown Detroit. The protesters carried signs calling for the bailing out the people not the banks and in favor of cancelling the bank debt which they believe is completely illegitimate.
One community leader, Marian Kramer, co-chair of the Michigan Welfare Rights Organization told the crowd that “They’re attacking the pensions of the public employees. Everybody else better start standing up, ‘cause you’re next on the chopping block, because it sets a model for the rest of the country and what you have.”
The decision has national ramifications for municipalities across the United States facing similar problems in the aftermath of the worst recession since the Great Depression of the 1930s. According to leading financial publications, dozens of states in the U.S. have pension systems that are considered underfunded and the decline of revenue sharing from the states and federal government can only mean more austerity for urban residents.
Since 2008, the banks have been bailed out to the tune of at least $14 trillion while poverty, unemployment and political repression has escalated for the overwhelming majority of working and oppressed people.
David Sole, a retired city employee in the Department of Water and Sewage, and an organizer for the Stop the Theft of Our Pensions Committee (STOPC) said outside the courtroom after the judge’s decision that the ruling “exposed Rhodes as an agent of Wall Street. Retirees will be driven out of their homes into the streets, we will be living in cardboard boxes if our pensions are cut and healthcare eliminated.”
“This is the same federal court system that justified slavery for over a hundred years. We cannot expect justice from them,” Sole continued.
Most people in the city of Detroit viewed the bankruptcy proceeding as a foregone conclusion. The right to vote and collective bargaining has been largely stolen under the guise of a ruling class response to the economic crisis.
Detroit is the largest per capita African American populated city in the U.S. The emergency manager law which voters turned down in November, 2012, has disenfranchised over half of the African American people in the state of Michigan.
Even though the people voted against emergency management, the right-wing dominated state legislature passed another law reinstituting political dictatorship on behalf of the banks. Along with the emergency manager law passed last December, the state lawmakers along with the governor made Michigan a right-to-work state.
No Mention of the Criminal Role of Banks and Corporations
The economic crisis in Detroit is the product of the restructuring of capitalism over the last six decades. Census reports going back to the 1950s reveal that large-scale capital flight, the loss of jobs and household income has driven down living standards inside the city.
In 1950 Detroit had a population of approximately 1.8 million people. Today there are only 700,000. These figures speak volumes in regard to the ravages of capitalist exploitation and national oppression.
Even after the theft of hundreds of thousands of industrial, service, professional and skilled jobs, Detroit was also targeted in the late 1990s and early 2000s for racist predatory lending. Sub-prime lending to Detroit residents led to tens of thousands of foreclosures.
Banks and other financial institutions profited immensely from the eradication of neighborhoods through fraudulent loans. City and state officials along with the federal government refused to place a moratorium on foreclosures, evictions and utility shut-offs resulting in the removal of 25 percent of the city’s population between 2000 and 2010.
City workers and retirees have been blamed consistently by the corporate media for the crisis. This is being done despite the fact that municipal employees have faced massive lay-offs and pay cuts over the last decade.
Nonetheless, these well documented facts were not taken into consideration by Judge Rhodes. In line with the right-wing agents of the banks and corporations, the bankruptcy court placed the onus of the crisis on the backs of the workers and oppressed.
During the course of the bankruptcy hearings and trial, over 100 people filed objections to the proceedings. Pensioners, residents, homeowners and workers outlined before the court why the bankruptcy filing was unjustified and illegal.
The proceeding violated the political will and the right to self-determination of the people of Detroit. After Orr was appointed as the emergency manager in March, his former law firm, Jones Day, was given a multi-million dollar contract to represent the city in the restructuring and bankruptcy.
This was done despite the fact that Jones Day has financial institutions such as Bank of America as its clients. It has been reported in the corporate media that up to $62 million in contracts have been handed out to outside firms to carry on the wholesale robbery of the city and its population.
Lawyers for the American Federation of State, County and Municipal Employees (AFSME) have already filed an appeal of the eligibility ruling. These attorneys will also seek to appeal in the 6th Circuit in an effort to place a stay on the bankruptcy proceedings.
Ruling Reveals the Hypocrisy of Bourgeois Democracy
Many of the protesters outside the courtroom were angered because their voices in opposition to emergency management and bankruptcy were completely ignored by Judge Rhodes. Atty. Jerome Goldberg who represented a pensioner in the trial said that an upcoming hearing on whether a deal drafted by the emergency manager to borrow $350 million from Barclays in order to pay off Bank of America and UBS for a questionable interest rate swap deal from 2005 will reveal the true character of the bankruptcy court.
“This decision by the federal court points to the necessity of the retirees mobilizing in the thousands. What’s more important than appealing Rhodes’ decision is to bring people into the streets to oppose this ruling.”
The trial on the Barclays swap deal will begin on December 17. The Moratorium NOW! Coalition is calling for people to demonstrate again outside the federal court in opposition to the payoff of Bank of America and UBS, two financial institutions which played a significant role in the mortgage crisis that has plagued Detroit for years.
In a leaflet circulated outside the federal courthouse on December 3, the Moratorium NOW! Coalition stated that “Beginning on December 17 there will be a trial to determine if 20 percent of city income tax dollars will be pledged for six years after bankruptcy to make good on this gift to the banks. This trial will determine if Detroit is to remain permanently enslaved by the criminal banks.”
Despite the overwhelming vote in November, 2012 against the emergency manager law, the slew of legal challenges to this usurpation of democratic rights, the filing of legal objections and the consistent petitioning and protests, the courts, acting on behalf of the banks, are committed to the blatant violation of the needs of the workers, retirees and residents.
These developments illustrate clearly the failure of capitalism in the present period. Capitalism has proven to be incapable of addressing the economic crisis that has impacted not only Detroit but the U.S. as a whole and indeed the world.
As one organizer said during the rally outside federal court, “This ruling demonstrates the need for a fundamental restructuring of the political, legal and economic system inside the U.S. There is no justice for workers and oppressed people in the courts. Our only victory will come from the court of public opinion crafted in the streets in struggle against the bankers and the bosses.”